If I don't want to fill in a tax residency declaration, can I refuse?
In practice, usually not — if an exchange has already been classified as a CASP and is required to fulfill its due diligence obligation, this typically becomes one of the necessary conditions for using that service, similar to the identity review a bank requires when opening an account. If you refuse to provide it, the exchange may restrict your account functionality, or even be unable to complete account opening or maintain normal use of an existing account.
If you have concerns about providing this kind of information, a more practical approach is to understand the legal basis for this requirement (the exchange has an obligation to perform due diligence, it isn't just choosing to collect extra data on its own), rather than trying to avoid providing it — since most regulated service providers list providing this kind of declaration as a precondition for using the service, refusing typically means you can't continue using it.
The wallet app I use offers both storage and exchange functionality — does that make it a CASP, and do I need to fill in this information?
The classification determination for this kind of hybrid service depends on whether it has a core function like exchange or trade matching, not on whether it markets itself as "non-custodial." If this wallet app, beyond storage, also lets you complete swaps between different tokens directly within the app, that exchange feature likely brings this service within the CASP definition, even if your private key is always held by you.
In practice, if the service you use has both of these functions, it's advisable to check that app's official documentation or terms directly, confirming whether it has classified itself as a CASP and which due diligence obligations it needs to fulfill — rather than relying purely on the inference "I thought it was non-custodial, so it should be unregulated."
If I don't use exchanges at all, only operating through self-custody wallets and decentralized protocols, does that mean I don't need to worry about these rules at all?
If your crypto lifecycle involves absolutely no CASP whatsoever (purely self-custody, only interacting through decentralized protocols), you genuinely are less directly affected by the due diligence mechanism, since there's no CASP role responsible for collecting and reporting your data. But that doesn't mean your tax reporting obligation disappears as a result — you still need to self-report all taxable income under the ordinary rules; you're just missing the CASP layer of data collection and cross-checking, so the recordkeeping responsibility falls more entirely on you.
In practice, operating without ever touching any CASP is increasingly rare — most investors will sooner or later come into contact with some kind of centralized service when converting assets to cash or trading with others, at which point their previously accumulated self-custody history may still need to be fully recorded and reported.
I'm completely new to crypto — do these new fields I'm being asked to fill in mean every future step I take will be visible to a tax authority?
That's not quite the right way to understand it. The data CASPs collect gets transmitted to relevant tax authorities through established reporting and exchange mechanisms, but that doesn't mean every single action you take on a platform gets "seen in real time" — data is typically compiled and reported periodically, not transmitted transaction by transaction in real time, and the cross-border exchange mechanism itself is still rolling out in stages (with different timelines by country).
For a beginner, a more useful way to understand this is: don't think of these new fields as a surveillance tool — instead, understand it as the fact that "your transaction records are being systematically preserved" is itself becoming more common. This means it's more worthwhile now than in the past to build a habit of thoroughly recording your own transactions from the very start, rather than assuming that an action you weren't asked to provide data for doesn't need recording.
If you've recently opened a new crypto exchange account, or logged into an old account you've had for a while, you might have noticed something: the identity verification process seems more involved than it used to be — beyond basic name and address, you're starting to be asked to fill in a new field like "tax residency." This isn't the exchange unilaterally trying to make things harder for you — it's connected to a regulatory definition called CASP (Crypto-Asset Service Provider). This article explains, at the most basic level, where this change comes from and what it actually means for you.
CASP is the collective term regulatory frameworks (like CARF and DAC8) use for "intermediaries required to fulfill reporting obligations," covering exchanges, custodians, and some wallet service providers with exchange functionality. If a service is classified as a CASP, it has a legal obligation to collect users' identity and tax-related information, and periodically report it to the tax authority in its jurisdiction. Most mainstream centralized exchanges, since they're already the centralized entity handling user account opening, identity verification, and trade matching, almost all fall within the CASP definition.
Once an exchange is classified as a CASP, it needs to perform "due diligence" on users — put simply, confirming your identity and tax residency, which is also why you might be asked to provide a tax residency declaration, or notice new tax-related questions added to the existing identity verification process. This process is, in some ways, similar to the "know your customer" (KYC) review a bank requires when opening an account, just extended into the layer of tax information disclosure.
If you use both an exchange and a self-custody wallet, you might notice the exchange requires you to fill in this information, but a purely self-custody wallet (with no exchange or trade matching functionality) typically doesn't ask. This is because a purely self-custody wallet, without a centralized operating party responsible for decisions, typically isn't classified as a CASP, and therefore isn't subject to this due diligence obligation. This distinction can help you understand why, even though both are "ways of using crypto," different services are asked to fill in vastly different amounts of information.
If you're new to crypto, this change actually provides a useful judgment cue: if a service asks you to fill in detailed tax residency information, it typically means it's a centralized service covered by a regulatory framework — you need to pay closer attention to the transaction records on this platform at the tax reporting layer. Conversely, if a service asks you no identity or tax-related questions at all, you're actually the one who needs to bear a more proactive recordkeeping responsibility yourself, since no intermediary is collecting and preserving transaction data on your behalf.
Regardless of whether the service you use asks you to fill in tax-related information, your own tax reporting obligation doesn't disappear or lighten as a result — a CASP's due diligence mechanism gives tax authorities an independent data source to cross-check against, it doesn't replace your own reporting responsibility. A more practical mindset in practice is to understand "being asked to fill in more information" as a reminder signal: it means your transaction records are increasingly likely to be visible to a tax authority, and proactively making sure your own reporting matches these records saves considerably more hassle than waiting passively until a discrepancy shows up.
⚠️ This article was researched against the most current regulations and official guidance available at the time of writing, but tax rules change frequently, and the applicable rules can vary by jurisdiction and individual circumstance. This content is intended to help you understand concepts and general direction — it does not constitute formal tax or legal advice. Before filing, please verify current rules directly with the official tax authority in your jurisdiction, or consult a qualified tax professional.