Label, a compliance software provider, and Sovos, a tax compliance company, have partnered to provide an end-to-end 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 a growing reporting burden ahead of CARF taking effect. The framework will introduce new tax transparency requirements for digital asset firms from 2027, covering activity during the 2026 tax year. The partnership combines Label’s CARF compliance technology with Sovos’ wider tax reporting infrastructure, giving digital asset exchanges, brokers and custodians a way to manage digital asset and traditional reporting requirements within the same compliance environment.
CARF establishes a global framework for collecting and exchanging tax information relating to digital asset transactions. It requires digital asset platforms and other Virtual Asset Service Providers (VASPs) to collect, validate and report detailed information about customers and their transactions across participating jurisdictions.
The requirements cover 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 meet jurisdiction-specific reporting requirements.
For digital asset platforms, one of the challenges is bringing together transaction data from different asset classes and internal systems. Firms must also validate customer tax information and apply relevant foreign exchange rules when converting transaction values into fiat currencies for reporting.
CARF reporting adds another technical requirement through the OECD’s XML format. Reporting files must meet specific structural and data requirements, meaning errors can result in rejected submissions. Platforms also need to manage CARF alongside established reporting regimes such as the US Foreign Account Tax Compliance Act (FATCA) and the 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 intended to reduce the need for firms to build 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 several stages of the CARF reporting process, including customer onboarding and self-certification, transaction aggregation, foreign exchange calculations and the generation 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 collection of W-8 and W-9 forms. 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, digital asset brokers, custodians, VASPs, banks and FinTechs providing digital asset services. It also targets fund managers with exposure to digital assets.
Label and Sovos argue that CARF reporting will need to be integrated with existing tax compliance processes rather than managed as a separate reporting function. Linking CARF with FATCA and CRS workflows could reduce duplicated data collection and help firms maintain consistent information across different regulatory regimes.
Label provides FATCA, CRS and CARF due diligence, reporting software and tax services to banks, FinTechs, fund managers and other financial services firms. Label’s analysis highlights the increasing 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 FinTech Global
Investors
The following investor(s) were tagged in this article.