DAC8 for Traditional Financial Institutions Offering Crypto Services

Banks, investment firms, and other traditional financial institutions that have begun offering crypto-asset services face a unique DAC8 compliance situation. They must integrate crypto reporting into their existing — and often complex — tax reporting infrastructure.

The Dual Reporting Challenge

Traditional financial institutions already report under CRS (for financial accounts), FATCA (for US-person accounts), and potentially DAC6 (for cross-border arrangements). Adding DAC8 creates a fourth reporting stream that must be managed alongside existing obligations.

The challenge is not just the additional reporting volume but the need to ensure consistency across all reporting frameworks. A client's identification data — name, address, TIN, tax residency — must be identical across CRS, FATCA, and DAC8 reports.

Leveraging Existing Infrastructure

The good news is that traditional financial institutions have decades of experience with international tax reporting. Their existing CRS compliance infrastructure — including TIN collection processes, self-certification workflows, and XML report generation systems — can be extended to support DAC8.

Key areas of leverage include established TIN validation databases, self-certification collection processes and forms, XML generation and submission systems, and compliance monitoring and quality assurance processes.

Integration Considerations

Institutions must decide whether to build DAC8 reporting into their existing CRS/FATCA systems or create a separate reporting stream. Integration is generally more efficient but requires ensuring that the different XML schemas (CRS vs DAC8/CARF) are correctly generated and that crypto-specific data fields are properly captured.

Conclusion

Traditional financial institutions are well-positioned for DAC8 compliance due to their existing tax reporting capabilities. The key challenge is integrating crypto-specific reporting into established processes without creating inconsistencies or duplications.