.EU’s DeFi Tax Gap Won’t Last Forever, Says Ex‑OECD Official
Jan 28 2026
The European Union’s latest cryptocurrency tax‑reporting regime, introduced under the eighth revision of the Directive on Administrative Cooperation (DAC 8), will force crypto exchanges and custodians to start gathering detailed user data from 2026. While the rules bind centralized platforms to the OECD’s Crypto‑Asset Reporting Framework (CARF), the rapidly growing decentralized‑finance (DeFi) sector remains largely out of scope—for now, according to a former OECD adviser.
A framework built on enforceable intermediaries
Colby Mangels, Taxbit’s global head of government solutions and a former senior adviser to the OECD, told Cointelegraph that the EU’s approach is intentional rather than accidental. “You can’t ask every private individual to report every crypto transaction they make,” Mangels explained. “Regulators have to target the intermediaries that actually conduct business on behalf of users.”
Under DAC 8, which aligns EU member states with CARF, crypto exchanges, custodial services and other virtual‑asset service providers (VASPs) will be required to collect standardized information about a user’s tax residency and to transmit aggregated transaction data to national tax authorities. The data will then be exchanged across borders through the OECD’s automatic information‑exchange network. The deadline for EU countries to transpose DAC 8 into national law was Dec. 31, 2023, and the first reporting obligations kick in in 2026.
Why DeFi is still exempt
DeFi protocols, by design, operate without a central operator or custodial relationship. Because DAC 8’s reporting obligations are attached to “identifiable intermediaries” that act as a business, many DeFi platforms fall outside the definition of a VASP. Mangels emphasized that this is a “deliberate focus” rather than an oversight.
The gap is reinforced by the parallel work of the Financial Action Task Force (FATF), which sets the global anti‑money‑laundering (AML) standards that increasingly intersect with tax‑reporting regimes. A FATF update released in June 2025 found that, of the 99 jurisdictions with advanced crypto rules, only 47 require certain DeFi platforms to register as VASPs, and merely four have actually done so. This limited regulatory coverage reflects the difficulty of pinpointing who “controls” or influences decentralized protocols.
The pressure is building
Even though DeFi is not yet covered by DAC 8, Mangels warned that the exemption is unlikely to be permanent. “Both the OECD and the FATF are keen to close jurisdiction‑shopping opportunities,” he said. “If a crypto service moves to a country that hasn’t signed onto CARF, it will quickly become a target for reputational and financial pressure.”
Recent FATF guidance suggests that future AML rules could extend VASP definitions to include more DeFi actors, which would in turn broaden tax‑reporting obligations. As more jurisdictions adopt CARF—48 have pledged to begin data exchanges by 2027, rising to 76 by 2029—the European tax landscape is set to converge with global standards, reducing the scope for “tax havens” in the crypto space.
What this means for the industry
- Centralised exchanges and custodians will need to upgrade compliance systems to capture user‑level data, tax residence and transaction totals by early 2026.
- DeFi users may continue to operate with relative anonymity in the short term, but the regulatory perimeter is expected to expand as AML and tax frameworks align.
- Crypto service providers considering relocation to non‑CARF jurisdictions should anticipate increased scrutiny and possible future alignment requirements.
- Tax authorities across the EU are already monitoring AML developments; any shift in FATF recommendations could trigger a rapid regulatory response.
Key Takeaways
| Point | Implication |
|---|---|
| DAC 8 implementation | Reporting obligations for exchanges/custodians start in 2026; data will flow to national tax authorities and be shared internationally via the OECD. |
| DeFi exclusion | Current rules target identifiable intermediaries; decentralized protocols lack a required legal entity, leaving them out of scope for now. |
| FATF influence | AML standards increasingly overlap with tax reporting; future FATF guidance may force DeFi platforms to register as VASPs. |
| Jurisdiction shopping | OECD monitors relocation of crypto services; non‑CARF jurisdictions face reputational and financial pressure. |
| Long‑term outlook | As CARF adoption expands, the regulatory gap for DeFi is expected to narrow, prompting broader compliance requirements. |
The EU’s tax‑reporting overhaul marks a decisive step toward mainstream taxation of crypto assets. While DeFi currently enjoys a regulatory “breathing room,” the combined force of OECD tax transparency standards and FATF AML rules suggests that the gap is temporary. Market participants should prepare for a tightening of compliance obligations and keep an eye on forthcoming guidance that could bring decentralized protocols under the same reporting umbrella as their centralized counterparts.
Source: https://cointelegraph.com/news/europe-defi-tax-gap-last-forever-ex-oecd?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
