2026 Crypto User Tax Challenge and High Net Worth User Survival Guide Yesterday, this screenshot about data reporting to the National Taxation Bureau sparked a lot of discussion in the Chinese encryption circle. I have browsed through various statements and feel that they are not very comprehensive. Today, I will spend time summarizing and providing suggestions on how Chinese KYC users can avoid possible tax claims. It was originally sent out at noon, but after further communication with Binance's colleagues, it was found that some important information was not very accurate, so it was deleted and edited again before being sent out. The answers are sourced from Gemni, Grok, and Chatgpt, and there may still be some inaccuracies. Please correct them. ~~~~~~~~~~~~~~~~~~ As the "Crypto Asset Declaration Framework" (CARF) promoted by the OECD in 2026 officially enters the "data collection year", the era of "no one knows as long as they don't withdraw money" for high net worth cryptocurrency users is entering its countdown. Below, I will analyze in depth through a series of Q&A sessions one ⃣ What is CARF? The CARF (Crypto Asset Reporting Framework) mentioned in the screenshot is a "crypto asset declaration framework" developed by the OECD. Purpose: To address the global issue of cryptocurrency tax avoidance. Logic: Similar to CRS (Global Tax Information Exchange) in the traditional financial industry. It requires cryptocurrency exchanges to collect users' identity and transaction information, and automatically exchange it with users' tax residency countries. Timeline: In November 2023, 48 countries and regions including the United Kingdom, Brazil, EU member states, and the Cayman Islands issued a joint statement committing to complete the first information exchange by 2027. This means that data collection will indeed be fully implemented around 2026. Simply put, 2026 will be an important time point for the end of the global era of tax-free encryption. Previously, you may not have needed to consider tax planning issues, but now you must face them. two ⃣ Has my asset information on Binance been obtained by tax authorities in various countries? One of the most concerning issues for everyone is this, which needs to be categorized by country. For CARF member countries, the answer is yes, such as Australia. At present, the Australian ATO undoubtedly has access to the assets and transaction information of Australian KYC users. Failure to report taxes in a timely manner may result in significant fines. For Chinese KYC users, there is no need to be nervous, as China has not yet joined CARF and there are many prerequisites for joining, at least not in the short term. And according to my verification with Binance colleagues, there is no possibility of automatic sharing of account data on Binance, and it is' basic information that can be exchanged '. This is also an important reason why Binance's friends refuted rumors on multiple channels yesterday. The screenshots circulating were information compiled by AI itself, which is not accurate. three ⃣ How long will it take for Chinese Mainland to join CARF Joining CARF is not simple, the prerequisites include: Revision of the Tax Collection and Administration Law of the People's Republic of China or the introduction of special regulations is required to empower tax authorities to mandate encrypted asset service providers (CASPs) to collect and submit user identities, transaction records, and tax resident information. Clear asset characterization: Although cryptocurrency trading is strictly regulated domestically, its legal status as "property" needs to be further clarified from a tax perspective in order to be taxed under subjects such as "income from property transfer". China needs to sign the Multilateral Regulatory Authority Agreement for Cryptocurrency Asset Declaration Framework (CARF MCAA) Technical and administrative infrastructure construction Referring to other jurisdictions such as Hong Kong, Singapore, and Japan, as well as China's previous experience in implementing CRS (Global Standard for Information Exchange), the entire process usually takes about 3 to 4 years. For example, Hong Kong: committed to completing legislation by the end of 2024, collecting data in 2027, and exchanging data for the first time in 2028 So, those who use Chinese KYC can rest assured in the short to medium term. Although with the advancement of the global CARF framework, China will eventually join the exchange of encrypted asset information to combat money laundering or increase taxes, we can closely monitor the progress of these prerequisites and have relatively ample time to prepare. four ⃣ Cryptocurrency is illegal, can it be taxed? This is a common misconception. Many people have come forward to refute me when I mentioned this topic before. This time, I have collected information from multiple sources: Being illegal does not mean that you do not need to pay taxes. In legal logic, 'illegal gains' are also within the scope of taxation. In Chinese tax law, there is no provision that 'only legitimate income is subject to taxation'. On the contrary, one of the means to combat illegal economic activities is to recover illegal gains and their corresponding taxes. In many criminal cases involving money laundering or illegal operation of cryptocurrencies, in addition to confiscating illegal gains, courts and tax departments often calculate the unpaid taxes. As early as 2008, the State Administration of Taxation issued an approval to levy personal income tax on individuals who purchase virtual currencies (such as game currency and Q currency) from players through the internet and sell them at a markup to obtain income. Legal experts generally believe that since cryptocurrencies are qualitatively similar to these virtual currencies, tax authorities can levy personal income tax on your differential income at a rate of 20% based on "property transfer income". So, don't take it for granted. When the country is really short of money, your illegal and compliant shield is just paper. So let's hope that China can later focus on the lucrative field of cryptocurrency taxation. ~~~~~~~~~~~~~~~~~ What should I do if my registered address is already in CARF? Since you can't avoid it, it's reasonable to avoid taxes At this point in 2026, simple "hiding" or "buying identity" will no longer be able to solve the fundamental problem, and it is better to have "substantial migration of tax identity". ❤️ The strongest safe haven: United Arab Emirates (Dubai/Abu Dhabi) Tax advantage: The UAE imposes a 0% capital gains tax and personal income tax on individual investors' cryptocurrency earnings. Operation suggestion: Obtain a Golden Visa by purchasing a property (AED 2M, approximately 545000 USD). Core logic: Since the data will eventually be reported to the UAE Tax Authority (FTA), why not become a tax resident of the UAE. When Binance reports your data to FTA, if FTA sees that you are a local tax resident with a tax rate of 0, they will no longer forward the data to China or Australia (or if they do, it doesn't matter because you are legally exempt from taxes in the UAE). Difficulty: You must reside in the United Arab Emirates for a certain amount of time each year and obtain a local tax residency certificate. If you have children, they also need to go there to study, otherwise you will still be a Chinese tax resident. ❤️ Best value for money: Thailand (LTR visa) Thailand has launched extremely aggressive preferential policies in 2025-2026 to attract digital talent. Tax Advantage: The Thai government has announced that individuals will be exempt from personal income tax on capital gains generated from trading cryptocurrencies through regulated platforms from 2025 to the end of 2029. Operational suggestion: * Apply for the "Wealthy Global Citizen" category in the 10-year Long Term Resident Visa (LTR Visa) with an asset requirement of exactly $1 million. Core logic: Although Thailand also participates in international cooperation, its domestic law currently explicitly exempts taxes. You can convert USDT into Thai baht or US dollars in compliance with regulations in Thailand, and this money is considered as "tax paid/tax-free" clean funds in the international banking system. These are particularly worth considering for high net worth individuals in CEX. There are other methods that are not convenient to disclose publicly. Finally, 2026 marks the beginning of comprehensive compliance in the cryptocurrency industry. We have enjoyed a decade of good times without paying taxes, and there will always be such a step. Fortunately, China is not yet included in CARF, and we are happier than many other countries. However, we also need to start considering tax issues in advance and be prepared.