DAC8 Reportable Transactions: What Must Be Declared

Understanding exactly which transactions must be declared under DAC8 is fundamental to compliance. This article provides a detailed analysis of each transaction category, with practical examples and edge cases that CASPs must address.

Category 1: Fiat-to-Crypto and Crypto-to-Fiat Exchanges

Any transaction where a user exchanges fiat currency for a crypto-asset, or a crypto-asset for fiat currency, through a CASP is reportable. This includes direct market orders (buying Bitcoin with euros at the current price), limit orders (placing an order to buy Ethereum when it reaches a specific euro price), recurring purchases (automated weekly Bitcoin purchases), and OTC transactions (large-volume trades executed through the CASP's OTC desk).

The reportable data includes the gross amount of fiat currency involved, the number of units of the crypto-asset, the fair market value at the time of the transaction, and the direction of the exchange (fiat-to-crypto or crypto-to-fiat).

Category 2: Crypto-to-Crypto Exchanges

Exchanges between different crypto-assets are reportable when facilitated by a CASP. This covers trading pairs on the exchange (swapping ETH for BTC), stablecoin conversions (converting USDT to USDC), token swaps (exchanging one ERC-20 token for another), and automated market-making transactions where the CASP acts as intermediary.

For crypto-to-crypto exchanges, both sides of the transaction must be reported — the crypto-asset given and the crypto-asset received, each with its fair market value in the reporting currency.

Category 3: Transfers of Crypto-Assets

Transfers of crypto-assets between users facilitated by a CASP are reportable. This includes internal transfers between user accounts on the same platform, transfers to external addresses when the CASP can identify the beneficial owner, and transfers received from external addresses.

The key challenge with transfer reporting is distinguishing between transfers to third parties (reportable) and transfers to the user's own external wallet (which may not be reportable in the same way). CASPs must develop procedures to classify transfers correctly.

Category 4: Retail Payment Transactions

Transactions where crypto-assets are used to pay for goods or services are reportable. This includes point-of-sale payments, online purchases, and invoice payments where the CASP facilitates the crypto-to-fiat conversion for the merchant.

Edge Cases and Practical Challenges

Several scenarios require careful analysis. Staking rewards deposited into a user's account, lending and borrowing transactions, airdrops credited to user accounts, hard fork proceeds, and NFT transactions all present classification challenges that CASPs must resolve through clear internal policies.

Conclusion

The four reportable transaction categories cover virtually all economic activity involving crypto-assets through a CASP. Building a transaction classification system that correctly categorizes every transaction is essential for accurate DAC8 reporting.