Catenaa, Sunday, January 25, 2026- Hong Kong’s crypto industry is warning that planned adoption of the Crypto-Asset Reporting Framework (CARF) could create operational and legal challenges if regulators do not clarify implementation details.
CARF, developed by the OECD, requires crypto service providers to collect and automatically share transaction and user data across borders to improve tax transparency.
Industry groups, including the Hong Kong Securities & Futures Professionals Association, broadly support the framework’s objectives but caution that reporting and data-collection rules may strain local firms.
Concerns include potential conflicts with personal data privacy laws, especially for clients not yet reportable, and record-keeping obligations that could extend to directors of dissolved firms.
Firms also raised issues with CARF penalties and tight deadlines. The association warned that fines calculated per account could become excessive if software or technical errors affect thousands of users.
It recommended caps on unintentional breaches and a tiered approach distinguishing administrative errors from deliberate non-compliance.
Operational procedures are another point of focus. While authorities plan electronic filing, firms favor automated API connections over manual XML uploads to reduce risk.
A proposed five-month reporting window after year-end could prove challenging in early years, prompting calls for temporary grace periods as systems are refined.
Hong Kong is among 76 markets committed to CARF, with 27 jurisdictions expected to begin data exchange by 2028.
The government aims to finalize legislative amendments in 2026 following ongoing public consultation.
Industry leaders say the framework’s success will depend on balancing international obligations with practical, secure reporting processes that do not overburden firms.
