Hong Kong forces crypto providers to track customer trades
Hong Kong's Legislative Council passed the CARF and amended CRS reporting bill on Nov. 4, 2026, requiring covered providers to begin collecting information in 2027 before international exchanges begin in 2028.
The legislation establishes the Crypto-Asset Reporting Framework (CARF), which requires crypto service providers to collect and report information to tax authorities. This collection begins on Jan. 1, 2027, with the Inland Revenue Department scheduled to start exchanging this information with partner jurisdictions in 2028.
The bill also implements the amended Common Reporting Standard (CRS) for financial account information, though this follows a separate schedule. The amended CRS will take effect in 2028, with international exchanges beginning in 2029.
CARF focuses on tax transparency rather than setting individual tax bills, requiring providers to gather information that tax authorities can use. The framework establishes due diligence and annual reporting requirements for crypto-asset service providers.
Provider obligations
Covered providers include businesses carrying out customer exchanges between crypto-assets and fiat currencies, or between different crypto-assets. This encompasses businesses acting as counterparties, intermediaries, and those operating trading platforms.
Providers must identify relevant users or controlling persons by their tax residence in reportable jurisdictions. The required information includes identifying details, tax-residence information, and aggregated transaction data.
The timetable means covered providers' information collection begins before the Inland Revenue Department's first international exchanges, so 2028 is not the starting point for all preparation.
Implementation timeline
The legislation follows Hong Kong's December 2024 announcement that it intended to complete legislative amendments by 2026 and begin crypto-information exchanges in 2028. The Nov. 4 vote represents the legislative milestone ahead of the collection year.
The Inland Revenue Department will issue guidance and has established a dedicated team to provide technical support and answer industry inquiries. The department also plans to develop a CARF reporting portal and publish the data schema defining the reporting format.
Hong Kong has confirmed that the international exchanges will be reciprocal and subject to confidentiality and security safeguards. Further details about the reporting process will be provided as providers prepare to collect the required data in 2027.
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