The UAE Ministry of Finance has taken a decisive step by signing the MCAA under the Crypto-Asset Reporting Framework (CARF), setting the stage for greater tax transparency in the digital asset sector. This decision aligns the country with leading global economies and sends a powerful message of trust and credibility to regulators and investors worldwide.
To unpack the implications of CARF and what it means for the UAE’s crypto industry, Crypto Breaking News conducted a written interview with Dr. Max Bernt, Global Head of Regulatory Affairs & European Managing Director at Taxbit. Below, he explains the framework, its impact on crypto firms, and why proactive compliance could be a game-changer for businesses.
Interview with Dr. Max Bernt
1. Could you briefly explain what the Crypto-Asset Reporting Framework (CARF) is and why the UAE’s decision to sign the MCAA is such a significant step?
Dr. Bernt: The Crypto-Asset Reporting Framework (CARF) is the OECD’s new global standard for tax transparency in the digital asset space. Much like the CRS and FATCA regimes for banks, CARF requires crypto-asset service providers—exchanges, brokers, custodians, crypto-ATM operators, and the like—to identify their customers, collect tax-relevant information, track transaction data, and report this information to tax authorities for international exchange.
But CARF goes a step further: it sheds light on an area that, until now, has largely been a black box for regulators—the internal ledgers of crypto intermediaries. By requiring reporting not just of on-chain transactions, but also of these off-chain movements, CARF creates an unprecedented level of transparency into crypto activity. It marks a game-changing way of gathering information, with applications that extend far beyond tax administration — particularly in financial crime investigations. The distinction is critical: under AML rules, authorities must actively request information from private-sector actors, whereas under tax regimes like CARF, the reporting obligation rests squarely with the service providers themselves.
Because CARF itself is only an international standard, countries need to transpose it into domestic law. So far, 69 jurisdictions have formally committed to doing so, and that number continues to grow.
The UAE’s decision to sign the Multilateral Competent Authority Agreement (MCAA) on CARF is a pivotal step. It positions the UAE firmly alongside leading global economies in adopting cutting-edge crypto transparency rules, sends a strong credibility signal to international regulators and institutional investors, and demonstrates that the UAE intends to be a compliant, trusted hub for digital assets. This alignment will help attract global capital and reinforce the UAE’s standing as a forward-looking financial centre.
2. What are the main obligations under CARF in the UAE, and which businesses will be most impacted?
Dr. Bernt: The Crypto-Asset Reporting Framework (CARF) in the UAE applies to “Reporting Crypto-Asset Service Providers” (RCASPs), which are businesses offering platforms for client crypto-asset transactions. Key obligations under CARF include due diligence, requiring RCASPs to identify customers and collect valid tax self-certifications, such as tax residence and identification numbers; and yes, for this purpose, the RCASP also needs to validate if the provided tax information is correct.
Additionally, RCASPs must start tracking all relevant customer transactions and, at the end of each year, provide XML reports to local authorities detailing these customer transactions and account information for evaluation and international exchange. They are also responsible for establishing robust governance and controls to monitor changes in customer circumstances, maintain accurate records, and implement reasonableness checks. CARF’s impact will be most directly felt by centralized exchanges, brokers, OTC desks, and crypto-ATMs; essentially, any platform that facilitates client transactions at scale.
Beyond businesses, CARF will also have a significant impact on the retail space through much higher levels of transparency. Take, for example, an individual identified as a German taxpayer by the RCASP they use in the UAE. The flow of information would look like this:
- The RCASP collects the customer’s information.
- The RCASP reports this data to the UAE tax authority.
- The UAE tax authority shares it with the German tax administration.
This creates a completely new level of cross-border visibility that simply did not exist before — a fundamental shift in how individual taxpayers’ crypto activity will be monitored internationally.
3. Which kinds of transactions will be considered reportable, and what data must companies collect?
Dr. Bernt: Reportable activity is intentionally very broad and typically includes crypto to fiat exchanges, crypto to crypto swaps, transfers to and from self-hosted wallets facilitated by a provider such as a non-custodial exchange, and high-value retail payments for goods/services in crypto where a provider facilitates the transaction
Data points to be collected by these companies will generally include: customer identity (their name, address, date of birth, jurisdiction(s) of tax residence, TIN), account identifiers, asset types, date and times of transactions, the quantity of transactions, fair market value or consideration, and counterparty details, where relevant.
4. How does CARF interact with DeFi, self-custody, staking, and wrapped tokens?
Dr. Bernt: CARF is primarily calibrated to intermediate activity. Where no identifiable service provider is involved — for example, in purely self-custodied DeFi — the usual reporting triggers do not apply. That said, gateways such as fiat on/off-ramps, centralized staking providers, and brokers remain squarely in scope and often capture the tax-relevant edges of DeFi activity.
For staking offered by a provider, both the principal and the associated reward flows fall within the scope of CARF. Meanwhile, for wrapped tokens, reporting follows the economic substance. Providers must ensure traceability from the wrapper back to the underlying position to avoid gaps.
Regarding Institutional Custody, CARF states that pure custody is not in scope. If a custodian’s only role is to hold clients’ crypto-assets—such as storing private keys or coins/tokens—and it does not facilitate or intermediate transactions, it is not considered a Reporting Crypto-Asset Service Provider. CARF obligations only arise when custody is combined with transaction intermediation, e.g., when operating as an exchange, broker, or staking provider.
CRS 2.0 treats custody differently. Under OECD guidance, custody of derivative crypto-assets, such as futures, forwards, or options, is reportable as a Custodial Account. By contrast, ordinary spot custody of coins or tokens is explicitly excluded from CRS 2.0 and, if relevant, falls instead within CARF.
So, to sum up: Pure spot custody is outside the scope of both CARF and CRS 2.0. Custody that is combined with intermediation of transactions brings CARF into play. Custody of derivatives is squarely within CRS 2.0. These distinctions are critical for providers who engage in both spot and derivative custody, as their reporting obligations differ depending on the type of assets they hold and the services they provide.
5. What practical challenges will UAE crypto firms face in implementing CARF?
Dr. Bernt: While CARF establishes a clear global standard, its practical implementation poses significant challenges for firms in the UAE. These challenges include data engineering and scale, requiring the construction and validation of reporting pipelines capable of handling vast amounts of granular transaction data. Additionally, customer outreach presents difficulties in collecting self-certifications from existing users within tight deadlines, necessitating freeze logic for non-responsive customers and continuous monitoring for changes in customer circumstances.
Further complexities arise from product coverage and interpretation, as firms must ensure consistent reporting treatment for intricate products and services offered across diverse platforms and venues. Global coordination is also a key concern, demanding alignment of approaches across group entities and partner jurisdictions, each with its own staggered adoption timelines and specific nuances.
Ultimately, the challenge for UAE firms extends beyond mere paper compliance to effective execution at scale. This involves seamlessly integrating data, processes, and governance in a manner that is both regulator-proof and operationally sustainable, while also establishing robust controls and auditability, including strong governance, audit trails, and evidence of “reasonableness” checks to withstand regulatory scrutiny.
6. Do you think CARF strengthens or reduces the UAE’s attractiveness as a crypto hub?
Dr. Bernt: Some may see CARF as diverging from crypto’s original ethos of decentralization. But in practice, it is overwhelmingly positive when viewed through the lens of institutional participation and mainstream adoption.
Compliance inevitably adds short-term costs, yet it delivers something the market has long lacked: regulatory clarity. And clarity is exactly what global banks, asset managers, and institutional partners need before they can commit capital, deepen banking ties, and build long-term strategies.
Jurisdictions that implement CARF credibly will be best placed to capture these institutional flows, anchor trust, and support sustainable market growth. For the UAE, this is not about constraint—it is about opportunity. By signaling reliability and global alignment, the UAE strengthens its international standing and reinforces its position as a trusted hub for digital assets.
7. What opportunities exist for firms that proactively comply?
Dr. Bernt: For firms that get ahead of CARF, the upside is significant. Strong compliance frameworks do more than check regulatory boxes; they accelerate onboarding with banks and asset managers, who increasingly require these safeguards before engaging. At the same time, supervisors respond positively to proactive compliance, which often translates into smoother licensing processes and faster approvals.
But the real differentiator lies in customer trust. In today’s market, transparency and strong data protection are not optional; they are competitive advantages, both for retail users and for institutional clients. Firms that embrace these standards early are not simply meeting expectations; they are positioning themselves as trusted counterparties. As the market matures, that trust becomes a decisive edge, allowing early adopters to move faster, win partnerships more easily, and solidify leadership in a rapidly institutionalising industry.
8. What should UAE crypto firms do now to prepare, and by when?
Dr. Bernt: The first reporting cycle under CARF and CRS 2.0 will not wait; firms in the UAE need to begin preparing immediately. And preparation here is not as simple as repurposing existing CRS or AML/KYC processes. CARF introduces a new layer of complexity; self-certifications vary by user profile, are highly technical, and errors can trigger severe penalties. On top of that, CARF is transaction-based, not account-based like CRS. That means firms cannot simply retrofit old systems; they need purpose-built infrastructure.
The roadmap is fairly clear. It starts with a gap assessment reviewing policies, data, and systems against CARF and CRS 2.0 requirements. From there, firms need to build the data pipelines to capture onboarding details, process customer self-certifications, and deliver transaction-level reports in the prescribed XML schema. Early outreach to existing users is essential to avoid last-minute bottlenecks, and firms must also make a strategic decision: build reporting engines internally or partner with specialist platforms. Whichever route they choose, piloting systems early is key to testing reporting volumes, edge cases, and accuracy. Strong governance cannot be overlooked either; monitoring customer changes, running reasonableness checks, and keeping audit trails are all critical.
The stakes are high. Under the existing CRS regime, penalties in the UAE range from AED 20,000 for inaccurate self-certifications to AED 250,000 for intentional violations, with potential license suspension for serious breaches. Enforcement under CARF is expected to be equally strict.
At Taxbit, we’ve developed a reporting infrastructure specifically designed for transaction-level regimes like CARF. Our platform allows firms to handle complex self-certifications, process large-scale reporting seamlessly, and stay compliant while reducing risk. This not only accelerates institutional readiness but also ensures firms can move into the first reporting cycle with confidence.
Conclusion
The UAE’s adoption of CARF marks a turning point for digital asset regulation in the region. As Dr. Bernt highlights, compliance will not be simple, but the rewards for early movers could be substantial. By embracing transparency, UAE-based crypto firms can position themselves as global leaders, attract institutional capital, and reinforce the country’s reputation as one of the world’s most forward-looking crypto hubs.
