Definition ∞ Automatic Exchange of Information refers to the systematic sharing of financial account information between tax authorities in different jurisdictions. This regulatory mechanism aims to enhance tax transparency and combat tax evasion across borders. It mandates financial institutions to gather and report data on account holders to their respective tax authorities, which then automatically transmit this information to the tax authorities of other participating countries where the account holder is a resident. This framework significantly impacts digital asset markets by extending reporting requirements to crypto exchanges and related service providers.
Context ∞ The implementation and expansion of Automatic Exchange of Information provisions, particularly with updates like the Crypto-Asset Reporting Framework, remain a central point of discussion in the digital asset regulatory landscape. Jurisdictions globally are working to adapt existing tax reporting structures to address the unique characteristics of cryptocurrencies and other digital assets. This ongoing adaptation influences how virtual asset service providers operate and how individual crypto holdings are assessed for tax purposes.
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