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The OECD’s Crypto-Asset Reporting Framework began its rollout in 2026, with early-adopter jurisdictions including the UK, the EU under its DAC8 rules, Australia, and Canada starting to collect data this year ahead of the first cross-border exchanges scheduled for 2027. For anyone holding cryptocurrency inside a Cook Islands Trust, or considering it, this is the moment to understand exactly what changes and what stays the same.
Offshore Broker structures Cook Islands Trusts holding cryptocurrency for clients across multiple jurisdictions. Our team includes Connor Steens and John Evans, both with direct trustee and private banking experience in the Cook Islands.
What CARF Actually Requires
CARF requires crypto-asset service providers, exchanges, brokers, and certain custodial wallet operators, to identify their customers and report account activity to that customer’s home tax authority, the same basic architecture the Common Reporting Standard has used for bank accounts since 2017. Coverage is broad: a digital asset is reportable if it functions as a means of payment or investment and can be transferred or traded digitally, which captures most cryptocurrencies and stablecoins. The United States has not signed onto CARF directly, but the Treasury Department submitted regulations to bring the US into the framework, reaching White House review in late 2025, and IRS Form 1099-DA already applies a largely compatible reporting standard to crypto brokers starting with the 2025 tax year and extending to decentralized finance platforms in 2026.
How This Differs From What Already Applied
For a settlor who has already been filing FBAR and Form 8938 correctly, CARF changes less than the headlines suggest. Cryptocurrency held through an exchange account, whether inside a trust-owned LLC or personally, that meets the threshold for a specified foreign financial asset was arguably already reportable under existing FATCA rules, depending on how the asset and the platform were classified. What CARF adds is precision and automation: crypto exchanges that previously had no standardized international reporting obligation now do, closing a genuine gap where digital assets sat in a regulatory space that predated the frameworks built for traditional banking. Our guide to FATCA and FBAR reporting for offshore trusts covers how the older forms already apply to structures holding cryptocurrency.
What This Changes for a Cook Islands Trust Holding Crypto
A properly reported Cook Islands Trust was never relying on crypto exchanges staying quiet. The settlor was already required to disclose the trust’s holdings, cryptocurrency included, through Form 3520, FBAR, and Form 8938 each year. CARF changes who else knows, specifically the exchange itself now reports automatically rather than only on request, but it does not create a new disclosure obligation for a settlor who was filing correctly already. What it does eliminate is the gap some investors relied on: holding crypto on a foreign exchange with no CRS-equivalent reporting regime and assuming that gap would persist indefinitely. That assumption was never a sound basis for a compliant structure, and CARF confirms it.
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Custody Choices Now Matter More
CARF’s reporting obligation attaches to the crypto-asset service provider, which means the custody arrangement a settlor chooses has more downstream effect than it used to. Crypto held on a centralized exchange or through a custodial wallet provider falls squarely within CARF’s reporting scope once that provider operates in a participating jurisdiction. Crypto held in cold storage or a self-custodied wallet, where the settlor or the trust-owned LLC controls the private keys directly rather than a third party, has no service provider to generate a CARF report in the first place. Neither arrangement changes the settlor’s own disclosure obligation, but it does change who else is reporting the same holdings and through which channel.
This has practical implications for how a trust-owned LLC should hold digital assets going forward. A structure that keeps meaningful crypto value on a single centralized exchange concentrates both counterparty risk, the exchange itself failing or freezing withdrawals, and reporting exposure in one place. Splitting holdings between a regulated custodial platform for liquidity and cold storage for longer-term positions is a pattern more settlors are adopting for reasons that have nothing to do with taxes: it reduces single points of failure, while keeping the settlor’s own FBAR, Form 8938, and Form 3520 filings complete regardless of which custody model applies to a given portion of the portfolio.
What CARF Does Not Change
CARF is a reporting framework, not an enforcement mechanism against foreign trustees. It does nothing to change whether a US court can compel a Cook Islands trustee to release assets, and it does nothing to weaken the duress clause that lets a trustee decline a repatriation order under legal compulsion. The trust’s core protective mechanism, jurisdictional separation between the settlor’s home court and the trustee, operates independently of how much a tax authority knows about the trust’s holdings. A settlor who understands that a fully disclosed structure was always the only version that holds up in court will find CARF changes the mechanics of one reporting stream, not the value of the underlying structure.
Getting Ahead of It
The practical step for anyone holding, or planning to hold, cryptocurrency inside an offshore structure is to treat every crypto exchange account the same way a traditional bank account has always been treated: disclosed, documented, and filed correctly every year, regardless of whether the exchange itself was already reporting automatically. Custodial arrangements matter here too; a self-custodied wallet with no third-party custodian sits outside CARF’s reporting scope entirely, which shifts the disclosure burden fully onto the settlor’s own filings rather than relying on an exchange’s report to confirm it. Our broader guide on Cook Islands Trust compliance and our original piece on holding cryptocurrency in an offshore trust cover the full framework this update sits inside.
