47 countries pledge to authorize the crypto-asset reporting framework by 2027

November 10, 2023 Coin Telegraph

The Crypto-Asset Reporting Framework is the new international standard for the automatic exchange of information between tax authorities.

Just under 50 national governments have issued a joint pledge to “swiftly transpose” the Crypto-Asset Reporting Framework (CARF), the new international standard on automatic exchange of information between tax authorities, into their domestic law systems. The statement was published on Nov. 10.

The Organisation for Economic Cooperation and Development (OECD) published the CARF in 2022. Developed from an April 2021 mandate from the G20, the CARF framework requires reporting on the type of cryptocurrency and digital asset transaction — whether through an intermediary or a service provider.

The statement’s authors intend to activate exchange agreements for information exchanges to commence by 2027. According to the text:

“The widespread, consistent and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.”

The list of pledging countries includes all 38 member states of the OECD and some traditional financial offshore havens such as the United Kingdom’s Overseas Territories of the Cayman Islands and Gibraltar. However, being Europe-centered, it misses crucial markets such as China and Hong Kong, the United Arab Emirates, Russia and Turkey. There is also not a single African country and only two Latin American ones — Chile and Brazil.

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CARF is not the only tax information exchange protocol that is being implemented on the international level to capture crypto income. In October, the eighth iteration of the Directive on Administrative Cooperation (DAC8) — a cryptocurrency tax reporting rule — was formally adopted by the Council of the European Union. DAC8 aims to grant tax collectors the jurisdiction to monitor and evaluate every cryptocurrency transaction carried out by individuals or entities within any other EU member state.

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High skilled jobs most exposed to AI, impact is still unknown – report

July 12, 2023 Coin Telegraph

A deep dive into global employment data and trends indicates that AI could have the biggest impact on high-skill jobs.

An employment outlook paper suggests that highly skilled professions are the most exposed to artificial intelligence while its potential impact on employment is yet to be seen.

The Organisation for Economic Co-operation and Development (OECD) released its latest employment report, with a focus on labour demand and widespread shortages given ongoing high inflation and resulting fiscal policies around the world.

A key takeaway is covered in a chapter dedicated to exploring why there is no significant sign of slowing labour demand due to advancements in AI. Measures of AI exposure show that available tools have shown the most progress in areas requiring “non-routine, cognitive tasks such as information ordering, memorization and perceptual speed”.

Just released: OECD’s 2023 Employment Outlook!

See latest analysis to find out more https://t.co/OoHoiCv9qE #EmploymentOutlook pic.twitter.com/6nSiv4JPMx
— OECD ➡️ Better Policies for Better Lives (@OECD) July 11, 2023

The OECD says these are key qualities of occupations requiring significant training or tertiary education. The research goes on to label “high-skill, white collar jobs” as the most exposed to AI.

Business professionals, managers, chief executives and science and engineering professionals are listed as the main occupations exposed to AI capabilities. Meanwhile food preparation assistants, agriculture, forestry and fishery labourers, cleaners and helpers are named as the least affected occupations by AI.

The publication also takes an in-depth look at evidence on the impact of AI on labour markets, noting that progress in space has been fast, making it hard to distinguish its outputs from those produced by humans.

The report states that the net impact of AI is ambiguous because while AI displaces some jobs, its can also stimulate labour demand by increasing productivity. AI also has the potential to create new tasks, which in part creates new jobs.

“AI will substitute for labour in certain jobs, but it will also create new jobs for which human labour has a competitive advantage.”

Meanwhile negative employment effects due to AI advances are hard to find. The OECD cites data which reflects high-skill workers seeing employment gains over the past decade in comparison to low skilled workers.

The chapter also notes that its findings on the impact on specific job levels comes before the advent of large language models like ChatGPT, noting that generative AI could further expand the scope of tasks and jobs that can be automated.

As Cointelegraph previously reported, the AI sector has seen a surge in job seekers, with Google searches for “AI jobs” four times higher than searches for “crypto jobs” during 2021s peak bull run.

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New OECD report takes lessons from crypto winter, faults ‘financial engineering’

December 14, 2022 Coin Telegraph

Coin Telegraph

The Organisation for Economic Cooperation and Development found regulation and retail consumer protections lacking in a highly complex trading environment.

The Organisation for Economic Cooperation and Development (OECD) analyzed the crypto winter in a new policy paper titled “Lessons from the crypto winter: DeFi versus CeFi” released Dec. 14. The authors examined the impact of the crypto winter on retail investors and the role of “financial engineering” in the industry’s current problems and found a lot not to like.

The paper from the OECD, an intergovernmental body with 38 member states dedicated to economic progress and world trade, concentrated on events in the first three quarter of 2022, and placed the blame for them squarely on a lack of safeguard due to “non-compliant provision of regulated financial activity” and the fact that “some of these activities may fall outside of the existing regulatory frameworks in some jurisdictions.”

The report noted that institutional market participants exited their positions sooner than retail investors, who may have even continued to invest as the market collapsed. Investors in TerraUSD (UST), for example, had “little understanding of the circular and reflexive character of the so-called stablecoin, which had no tangible value.” Meanwhile, contagion spread through the industry due to its high interconnectivity.

The crypto winter also “exposed new forms of financial engineering” that had a negative effect on the market. According to the report:

“Developments such as liquid staking, creating derivatives backed by illiquid locked assets, create extreme liquidity transformation risk and maturity mismatches. Consecutive rounds of re-hypothecation of crypto-assets that are considered by platform clients to be lent and/or ‘locked’ as collateral create risks related to high leverage and liquidity mismatches in crypto-asset markets.”

Many of those practices derive from the “composability” of DeFi, that is, the ability to combine smart contracts to create new products, and the practices continue unabated, the report said.

1/Excellent new research by the OECD on the role of #CeFi and #DeFi in the crypto turmoil. #Crypto advocates may try to fault centralized players, but do not overlook the role of DeFi. Smart contract flaws + leveraged trading fueled volatility. https://t.co/EVCRhp3y0a pic.twitter.com/lWA2PeUclw
— Brian Laverdure, AAP (@brian_laverdure) December 14, 2022

The authors wade into the CeFi/DeFi divide within crypto, noting that DeFi worked “without issues” in the first half of the year, although DeFi’s automated liquidations could lead to greater market volatility. Both types of platform may lack regulation or regulatory compliance, and CeFi and DeFi are highly interconnected in a concentrated ecosystem.

More faults were found in DeFi. The report documents an oracle failure during the Terra ecosystem collapsethat created opportunities for abuse on some exchanges. Differences in information access led to DeFi and CeFi platforms behaving markedly different during that crisis. The report noted:

“CeFi and DeFi markets work better in bull markets.”

The report stressed the need for educated retail investors. “When appropriate disclosure about risks is not provided by market participants, policy makers could provide warnings to investors, and in particular to retail investors, about the increased risks of such activities,” it said. It added that crypto market crises will have greater potential to spill over into tradition markets as the industry develops, and international coordination would be necessary “to avoid regulatory arbitrage opportunities currently exploited by some non-compliant crypto-asset firms.”

OECD releases framework to combat international tax evasion using digital assets

October 10, 2022 Coin Telegraph

Coin Telegraph

The OECD said it planned to present the Crypto-Asset Reporting Framework to a meeting of G20 finance ministers and central bank governors on Oct. 12-13.

The Organisation for Economic Cooperation and Development, or OECD, has published a framework aimed at having tax authorities achieve greater visibility on crypto transactions and the users behind them.

In an Oct. 10 announcement, the OECD said it planned to present the Crypto-Asset Reporting Framework, or CARF, to a meeting of G20 finance ministers and central bank governors on Oct. 12-13. The crypto tax framework proposed automatically exchanging information on crypto transactions between jurisdictions annually, given a rise in the number of unregulated exchanges and wallet providers.

According to the OECD, the lack of transparency in not having crypto transactions fall under the group’s and G20’s Common Reporting Standard, or CRS, increases “the likelihood of their use for tax evasion.” The framework will include carve outs for “assets that cannot be used for payment or investment purposes” and those already required for reports under the CRS.

“Today’s presentation of the new crypto-asset reporting framework and amendments to the Common Reporting Standard will ensure that the tax transparency architecture remains up-to-date and effective,” said OECD secretary-general Mathias Cormann.

The announcement added:

“The CARF will target any digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions [...] Entities or individuals that provide services effectuating exchange transactions in crypto-assets for, or on behalf of customers would be obliged to report under the CARF.”

Developed as the result of an April 2021 mandate from the G20, the CARF framework requires reporting on the type of cryptocurrency as well as the type of digital asset transaction — whether through an intermediary or service provider. In August, the OECD approved amendments to the CRS including bringing central bank digital currencies under the scope of its reporting.

If approved, the framework would likely facilitate information sharing on crypto transactions between the OECD’s 38 member countries — a list which includes the United States, Japan, South Korea and many nations within Europe.

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OECD opens proposal on tax transparency framework for crypto to public comment

March 22, 2022 Coin Telegraph

Coin Telegraph

According to the OECD, the crypto market posed a “significant risk” around tax transparency, claiming that any gains will eventually be lost without additional safeguards.

The Organisation for Economic Cooperation and Development, or OECD, has suggested additional requirements on reporting crypto transactions and identifying users aimed at increasing transparency for global tax authorities.

In a public consultation document released on Tuesday, the OECD opened for public comment a proposal that would require crypto service providers to better identify users and report on certain transactions. The organization said that under current reporting requirements, tax authorities do not have “adequate visibility” for transactions dealing with crypto assets. According to the OECD, the crypto market posed a “significant risk” around tax transparency, claiming that any gains will eventually be lost without additional safeguards.

The proposal suggested individuals and businesses already dealing in crypto services — including exchanges, retail transactions, and transferring tokens — have 12 months from the effective date of the rules to comply with the reporting requirements. Members of the public were asked to weigh in on which crypto assets would be covered under the proposal — including nonfungible tokens — as well as on tax reporting rules and “due diligence” procedures related to collecting information from those engaging in crypto transactions for both hot and cold wallets.

“Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries and without any central administrator having full visibility on either the transactions carried out, or crypto-asset holdings,” said a summary of the report. “Therefore, crypto-assets could be exploited to undermine existing international tax transparency initiatives.”

Today the OECD released a public consultation document concerning a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets. https://t.co/1qKFyXWOQb
— Amy Lee Rosen (@amyleerosen) March 22, 2022

The proposal will be available for public comments until April 29, with a consultation meeting expected at the end of May. The OECD said it aims to report on the amended reporting rules during the G20 Bali summit in October.

Tax season is upon residents of the United States, with many required to submit their returns by April 18. Countries’ tax authorities often have different reporting requirements for HODLing or exchanging crypto assets, with many U.S.-based centralized exchanges sending the Internal Revenue Service paperwork reflecting transactions for the previous year. Taxpayers often report exchanges of tokens or crypto into fiatas capital gains or losses.

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