Taxman Coming for Crypto: $457 Billion Estimated Taxable Activity on Blockchains

The estimated taxable cryptocurrency activity on six major blockchains is projected to reach $457 billion in 2025, according to Chainalysis. This figure includes realized capital gains, certain incomes from mining, staking or lending, as well as payments made in crypto.

The CARF, a framework created by the OECD to automate tax information exchange between countries, directly covers only 14% of potentially taxable on-chain flows studied. The remaining 86% include exchanges on DEXs, peer-to-peer transfers, income generated directly on-chain, and many payments.

The problem with tracking private wallets for tax purposes is that authorities often lack compliance services to obtain this information. Additionally, the CARF is not retroactive, which means old transactions may be missing from data received by tax authorities.