How crypto exchanges meet CARF and DAC8 without building it in-house

For CARF, an exchange is the hardest case. It's also the most common one. Users scattered across dozens of countries, transactions by the million, and a due-diligence duty that kicks in the moment someone signs up. The obligation itself is clear enough. What's actually in question is whether you build the system that meets it or buy one. Here we cover what CARF and DAC8 ask of an exchange, and which way the build-or-buy call tends to go.

You file in one place, wherever you're based

More users doesn't mean more filings. That surprises people. Your reporting jurisdiction comes from where the business is based, and you file there, once. The home countries of your users decide who's reportable and where their data goes; they don't decide where you file. If that split still feels fuzzy, start with nexus under CARF.

Most of the work happens at onboarding

Due diligence is the hard part. You collect a valid self-certification, then sanity-check that it's reasonable. You validate the tax ID. And you deal with the users who simply won't certify. Get that right at sign-up and the annual report comes down to pressing submit. The full flow lives in self-certification and TIN validation and the 60-day rule.

Every authority's format, from one dataset

Once national formats enter the picture, a large exchange files in more places than it planned for, everything from the OECD schema to Sweden's KU94. Getting each authority's exact format right, and validating it before you submit, is what separates a report that clears from one that bounces back. For what actually sits inside the file, see the CARF XML schema.

Build or buy

Build it yourself and you're signing up for a team, hundreds of edge cases, every national format, and audit logs to keep for years. All of that for a single output: one filing. Kryptos goes live in days and produces that same filing. But the same data also drives tax withholding and a tax centre for your users, so your compliance spend buys more than a report.

Here's a useful test. Ask what happens to the data once the report is filed. If the answer is nothing, you'll pay to build the very same pipeline again for the next rule that lands. Our CARF and DAC8 platform handles the whole thing in one integration. See how it works for exchanges and custodians, or book a demo on your own data.

Compliance that also serves your users

The per-user data you assemble to file is the same data behind a real tax experience for those users. From that one integration you can put a tax centre in front of them, under your own brand. The numbers you worked out for the regulator become numbers your users actually see. Compliance stops being pure cost and starts helping you keep customers, and that's the case for one platform over a tool that just files and stops.

About the author

Sukesh Tedla

Founder & CEO