Hong Kong Industry Lobby Urges Government to Ease CARF Compliance Burden

_{Photo credit: Rawpixel.com / Shutterstock.com} 

The Hong Kong Securities & Futures Professionals Association (HKSFPA) has advised the city’s government to reduce the burden for local institutions in its implementation of the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF). 

While the association says it generally favors CARF in principle, it urges the government to consider reducing the burden on those with no reporting activity, strengthening data protections, and allowing companies to transfer their record-keeping to regulated third parties after ceasing operation.

In particular, the HKSFPA said: 

The proposal to introduce penalties of ‘$1,000 per account/user’ (similar to the UK model mentioned in the consultation background) could lead to disproportionately astronomical fines for systemic software errors affecting thousands of accounts where there was no intent to defraud. We propose a ‘reasonable cap’ on total penalties for unintentional administrative errors or first-time offenses, ensuring that the ‘per account’ calculation is reserved for cases of willful negligence or intentional evasion.

CARF is designed to increase tax transparency, combat money laundering, and help authorities enforce digital asset tax compliance by implementing a new standard for automatic tax information exchanges for digital asset users on a global scale. CARF’s steps are similar to the OECD’s existing Common Reporting Standard for traditional financial accounts, but tailored to digital assets and services.

As of January 2026, 48 jurisdictions have implemented CARF-aligned reporting requirements that compel crypto service providers, including centralized exchanges, some decentralized platforms, brokers, and crypto ATMs, to gather customer digital asset transaction data.

Hong Kong is among 27 jurisdictions undertaking the first exchanges of digital asset data for tax purposes in 2028 and is expected to have the legislative frameworks and reporting procedures for doing so in place by January 1, 2028.