Hong Kong Lobby Seeks Softer CARF, CRS Penalty Rules

The Hong Kong Securities & Futures Professionals Association (HKSFPA) has urged the city’s government to soften some elements of its planned implementation of the Organisation for Economic Co-operation and Development’s (OECD) crypto reporting standards.

The industry body warned that the OECD’s Crypto Asset Reporting Framework (CARF) and related Common Reporting Standard (CRS) amendments could saddle local institutions with operational and liability risks.

CARF is a new standard for automatic tax information exchange for crypto asset users across borders, while CRS is the OECD’s existing automatic information exchange regime for traditional financial accounts.

Hong Kong is one of 76 markets that have committed to implementing CARF, and among the 27 jurisdictions undertaking first data exchanges by 2028, according to the OECD.

Hong Kong lobby backs CARF in principle but wants softer penalties

The HKSFPA said it broadly supports the direction of the proposals, including mandatory registration of crypto service providers and expanded transactions reporting.

However, it called for lighter requirement for those with no reporting activity, stronger personal data protections and the ability to transfer record-keeping to regulated third parties when companies cease operations.

The group warned that uncapped per-account penalties and personal liability for directors could raise compliance risks, and urged for the introduction of clear penalty caps and safeguards for companies that act in good faith.

Related: Colombia advances crypto tax rules as global reporting standards take shape

Hong Kong’s crypto hub push faces CARF and CRS compliance pressures

​Locally, the debate falls against the backdrop of Hong Kong’s push to position itself as a regulated crypto hub. 

The city’s licensing regime mandates centralized exchanges serving Hong Kong investors to meet Know Your Customer (KYC), custody, market abuse and Anti-Money Laundering (AML) standards. 

As of early 2026, 11 crypto trading platforms, including Hashkey Global, OSL, and Bullish, are authorized by the SFC to operate in the city.

Meanwhile, CARF is reshaping global crypto tax reporting. Early-moving jurisdictions have started collecting data from crypto exchanges, such as standardized tax residency, balance and transactions.

There are 48 jurisdictions, including the United Kingdom and members of the European Union, that plan to begin their first cross-border exchanges of crypto reporting data in 2027, based on information collected in 2026.

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