Hong Kong backs CARF but wants softer rules and penalties

In its response to the consultation, the association argues that implementing the Crypto-Asset Reporting Framework (CARF) and the updated Common Reporting Standard (CRS) shouldn’t turn into a source of extra costs and personal liability for crypto company executives.

The consultation began on December 9, 2025, and runs through February 6, 2026. According to a government announcement, Hong Kong plans to amend the Inland Revenue Ordinance in 2026 and start automatic exchanges of crypto transaction data with partners in 2028, with CRS changes coming online in 2029.

HKSFPA proposes easing the regime for entities with nil reporting (nil reporters) so registration and annual procedures don’t become an expensive formality in both time and money. The association also wants explicit protections for personal data when platforms collect expanded client information during onboarding, including from users who aren’t yet tied to “reportable” jurisdictions. It also raises the issue of recordkeeping: if a company shuts down, it says document storage should be allowed to move to regulated third parties rather than remain the responsibility of former directors.

The most controversial section is penalties. HKSFPA says a “$1,000 per account” model with no cap is risky: a major software failure could turn an ordinary technical error into multimillion-dollar penalties. The association is asking for reasonable caps, safe harbors for good-faith participants, and a “soft launch” for the early years of the regime.

The push to roll out cross-border data exchange remains a global issue. In the OECD’s list of CARF commitments, 48 jurisdictions are set for exchanges as early as 2027, 27, including Hong Kong, are targeting 2028, and the U.S. has indicated 2029. Starting January 1, 2026, first-wave countries are already beginning to collect standardized customer and transaction data from crypto platforms so they can later pass it on to tax authorities.

For Hong Kong, this is also about its status as a regulated crypto hub. The SFC website lists licensed virtual asset trading platforms that are expected to be among the first to start exchanging tax data. As of January 2026, the list includes 11 platforms, including OSL, HashKey, and Bullish.