White House Considers Expanding IRS Surveillance to Crypto Wallets Abroad

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The White House is reviewing a proposal that would significantly expand the IRS’s reach, allowing it to surveil US taxpayers’ cryptocurrency transactions with foreign-based exchanges and wallets.

The proposed rule, now under executive branch review, aims to implement the international Crypto-Asset Reporting Framework (CARF).

CARF would mandate that digital asset service providers, including those offshore, collect and report specific transaction information of their US customers to the IRS. The administration contends this is necessary to close tax loopholes and prevent capital flight, arguing it will “promote the growth and use of digital assets in the United States.”

This push for greater financial transparency comes with a noted limitation: the White House has previously stated that new reporting obligations should not extend to the decentralized finance (DeFi) ecosystem, at least for now.