Tax Authorities Struggle to Capture Crypto Activity as CARF Falls Short

The world of cryptocurrency is facing a significant challenge in terms of tax compliance. According to recent research from Chainalysis, an estimated $457 billion in potentially taxable onchain crypto activity took place in 2025. This figure represents only about 14% of the total onchain activity analyzed, with the remaining 86% falling outside the practical reach of the OECD's Crypto-Asset Reporting Framework (CARF).

The US accounted for a significant portion of this activity, with $112.6 billion in potentially taxable crypto transactions. Germany and China followed closely behind, with estimated values of $24.1 billion and $21.0 billion, respectively.

However, the majority of onchain activity remains difficult to track due to decentralized exchanges (DEXs), self-custody wallets, peer-to-peer transfers, and other forms of income that are challenging for tax authorities to reconstruct. CARF was designed to close a weakness in traditional financial reporting systems by requiring centralized exchanges, brokers, and wallet providers to collect identifying information and report it to relevant tax authorities.

Despite its efforts, Chainalysis estimates that only around 14% of onchain potentially taxable activity falls within the framework's practical visibility. This raises concerns about the effectiveness of CARF in capturing the full scope of crypto activity, particularly as governments prepare for the biggest expansion of international crypto tax reporting to date.