White House Releases 166-Page Digital Asset Report, Mandating U.S. Citizens to Declare Overseas Crypto Assets
(Background: Exploring New U.S. Crypto Asset Tax Regulations: Content, Impact, and Investment Strategies)
(Context: How to Tax Investments in “Bitcoin Spot ETF”? Pay Attention to These Two Points)
Death and taxes are unavoidable for humanity. On July 30, the White House unveiled a 166-page digital asset report covering taxes, banking, stablecoins, and decentralized finance (DeFi). Among the contents is a description of the obligation for U.S. citizens to declare “global crypto assets.”
Mandatory Declaration of Overseas Crypto Assets
The most notable part of the report requires U.S. taxpayers to declare “foreign digital asset accounts.” This new regulation mirrors the threshold set by the Foreign Bank and Financial Accounts Report (FBAR), mandating the declaration of any overseas crypto assets exceeding $10,000. The White House emphasized that the convenience of cross-border transfers and offshore exchanges has increased the “tax evasion risk” for citizens, necessitating action from tax authorities.
The Internal Revenue Service (IRS) has removed the “willful failure to report” option from Form 14457, indicating a shift in enforcement focus towards “compliance reporting.” Additionally, the U.S. will begin collecting data in accordance with the OECD’s Crypto Asset Reporting Framework (CARF) standards starting January 1, 2026, with the first information exchange expected to be completed by 2028. An excerpt from the report states:
The convenience of cross-border transfers and the use of offshore exchanges presents opportunities for U.S. taxpayers to evade their tax obligations.
DeFi Exemption: A Regulatory Balance Under Anonymity
The White House report indicates that the IRS and the Treasury should “not impose new reporting requirements on DeFi transactions” when enforcing the declaration of overseas crypto assets. DeFi lacks centralized intermediaries or identifiable users, making tracking challenging. Therefore, the report grants exemptions, reflecting the Trump administration’s desire not to stifle innovation or extend jurisdiction excessively over anonymized decentralized finance.
This raises the question: Do U.S. citizens need to report crypto assets “hidden” in self-custodied wallets on-chain? It can only be said that the responsibility lies with the conscience of the declarant.
However, the CLAIRTY Act only exempts projects that are “sufficiently decentralized,” and FinCEN has been instructed to assess whether the Bank Secrecy Act requires a dedicated chapter. As interactions between DeFi and traditional finance heat up, whether regulatory measures will tighten remains to be seen.
