Compliance software provider Label and tax compliance company Sovos have partnered to provide a reporting solution for digital asset platforms preparing for the OECD’s Crypto-Asset Reporting Framework (CARF).
According to analysis from Label, digital asset exchanges, brokers and custodians face increasing pressure to prepare for CARF, which introduces new tax transparency requirements from 2027 covering activity during the 2026 tax year. The partnership combines Label’s CARF technology with Sovos’ wider tax reporting infrastructure, allowing firms to manage digital asset and traditional reporting requirements through the same compliance environment.
CARF establishes a framework for tax authorities to collect and exchange information on digital asset transactions. Digital asset platforms and other Virtual Asset Service Providers (VASPs) will need to collect, validate and report customer and transaction information across participating jurisdictions.
The framework covers activities including digital asset-to-fiat conversions, digital asset-to-digital asset transactions, staking rewards and certain retail payments. Firms must also complete customer due diligence, collect tax self-certifications and comply with reporting requirements across different jurisdictions.
For compliance teams, one of the main challenges is consolidating transaction information from different digital asset types and internal systems. Firms must also validate customer tax information and apply relevant foreign exchange rules when calculating transaction values in fiat currencies.
CARF introduces additional technical requirements through the OECD’s XML reporting format. Files must meet defined structural and data requirements, meaning errors can result in rejected submissions. Firms will also need to manage CARF alongside existing frameworks including the US Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS).
The partnership brings Label’s CARF capabilities together with Sovos’ existing tax reporting infrastructure, including its 1099-DA and wider information reporting services. The companies said the combined offering is designed to reduce the need for firms to develop CARF reporting capabilities internally.
Label chief revenue officer Scott Nice said, “CARF introduces a new level of complexity for digital asset platforms, requiring robust data aggregation, validation, and reporting capabilities. Our partnership with Sovos delivers a scalable solution that removes the burden of building CARF compliance capabilities in-house.”
Sovos VP of regulatory affairs Wendy Walker said, “Sovos is committed to helping organizations stay ahead of evolving regulatory requirements. By partnering with Label, we extend our digital asset reporting capabilities to include CARF within a broader, integrated compliance framework.”
The solution covers customer onboarding and self-certification, transaction aggregation, foreign exchange calculations and the production of OECD-compliant CARF XML files. The companies said the system has recorded a zero rejection rate for its XML reporting.
Additional functionality includes cost basis tracking, gain and loss calculations, tax identification number compliance and W-8 and W-9 form collection. The platform also supports 1099-DA, 1099-B and other US reporting requirements, alongside state-level filing through the Combined Federal/State Filing Program.
The offering is aimed at digital asset exchanges, brokers, custodians, VASPs, banks and FinTechs providing digital asset services, as well as fund managers with digital asset exposure.
For compliance teams, Label’s analysis highlights the need to treat CARF as part of a wider reporting framework rather than as a standalone obligation. Connecting CARF with FATCA and CRS processes could help reduce duplicated data collection and maintain consistency across different reporting regimes as digital asset tax transparency requirements expand.
Label provides FATCA, CRS and CARF due diligence, reporting software and tax services to banks, FinTechs, fund managers and other financial services firms. Its analysis highlights the growing complexity of digital asset reporting as firms prepare for CARF alongside existing tax regimes. Sovos’ Compliance Cloud platform processes more than 16bn transactions annually across nearly 200 countries and serves more than 100,000 customers.
Copyright © 2026 RegTech Analyst
Copyright © 2026 RegTech Analyst
