International efforts to bring crypto into the global tax-reporting system may be leaving a large part of the market outside regulators' view, underscoring a widening gap between traditional reporting rules and how crypto transactions actually occur.

Blockchain analytics firm Chainalysis estimates that at least $457 billion in potentially taxable crypto activity took place on-chain globally in 2025. The figure includes realised gains, income from mining, staking, lending and gambling, as well as crypto-denominated payments across Bitcoin, Ethereum, Solana, Tron, BNB Smart Chain and Base.

However, Chainalysis estimates that transactions within the practical reach of the OECD's Crypto-Asset Reporting Framework, or CARF, accounted for only about 14% of that activity.

That would leave roughly 86% outside the framework's reporting reach, including activity involving decentralised exchanges, peer-to-peer transfers, private wallets, on-chain income and crypto payments.

The gap is significant because CARF was designed around a financial system in which an identifiable intermediary sits between the taxpayer and the transaction. CARF was agreed by the OECD in 2022 and is modelled on the Common Reporting Standard, the automatic information-exchange regime that jurisdictions have applied to cross-border bank accounts since 2014 — a system that works because a bank typically sits between a depositor and their money.

Under the framework, crypto exchanges, brokers, dealers and other qualifying service providers collect customer information and report relevant transactions to tax authorities, which can then exchange that information with the taxpayer's country of residence.

CARF covers crypto-to-fiat exchanges, crypto-to-crypto exchanges and certain transfers.

The challenge is that much of crypto activity does not require such an intermediary. A user can move assets from one self-custodied wallet to another, trade through a decentralised exchange, earn staking or lending income through on-chain protocols, or receive crypto payments without a traditional financial institution having custody of the assets or maintaining a conventional customer record.

That creates a structural weakness in a reporting system that depends heavily on intermediaries to identify taxpayers.

The size of the potential tax base is also notable. Chainalysis estimates that the United States accounted for $112.6 billion of the $457 billion in potentially taxable activity in 2025. North America accounted for $134.6 billion, followed by the European Union at $125.1 billion and East Asia at $54.7 billion. Implementation is already under way on separate tracks: the European Union has transposed CARF into law through its DAC8 directive, which requires reporting to begin in early 2026, and the United States has required custodial brokers to report crypto sales on the new Form 1099-DA beginning with the 2025 tax year, while Congress in 2025 repealed the proposed extension of broker-reporting rules to non-custodial DeFi front-ends.

Importantly, Chainalysis describes the $457 billion figure as a lower boundary rather than a complete measure of crypto's taxable economy. Its analysis excludes activity taking place entirely inside centralised exchanges, as well as activity on other blockchains and transaction types not covered by its methodology.

That means the issue may be larger than the headline figure suggests.

The response is unlikely to be as simple as requiring every wallet or blockchain address to identify its owner. Such an approach would be technically difficult and could create serious privacy and compliance concerns.

A more workable solution would combine CARF with blockchain intelligence and targeted enforcement.

CARF is not necessarily failing because it was poorly designed. Its core assumption is that intermediaries are the best place to collect tax information, and that remains true for centralised crypto businesses.

The problem is that crypto has moved beyond that model. The market increasingly combines regulated exchanges with self-custody, decentralised exchanges, smart contracts, stablecoins and peer-to-peer transfers. A tax system built primarily around identifiable intermediaries will inevitably struggle when economic activity shifts outside them.

The OECD itself recognises that crypto markets are evolving rapidly and says further work may be needed to ensure sufficient coverage, including developments in decentralised finance.

The likely answer, therefore, is not to abandon CARF but to add an on-chain intelligence layer around it.

CARF can show tax authorities what regulated intermediaries know about a taxpayer. Blockchain analytics can help show what happened beyond those intermediaries.

For governments, the main challenge is turning those two sources of information into a single picture of a taxpayer's crypto activity. Some of the earliest markers of that combined approach are already visible in emerging markets: Nigeria has begun implementing CARF requirements by tying crypto transactions to tax and national IDs, while Kenya's capital markets regulator has floated a tender notice to procure a blockchain analytics system.

Until that happens, the growing use of self-custody and decentralised finance could leave tax authorities with a paradox: blockchains make transactions more transparent than traditional finance, but tax authorities may still struggle to determine who owes the tax.

Related coverage:

• REGULATION | Nigeria Starts Implementing CARF Requirements by Tying Crypto Transactions to Tax and National IDs
• REGULATION | The Kenya Capital Markets Regulator Floats Tender Notice to Procure a Blockchain Analytics System
• TAXATION | The African Tax Administration Forum (ATAF) Urges for Practical, Implementable Approaches to Crypto Taxation at OECD Global Forum
• TAXATION | What You Need to Know About the European Union (EU) New Crypto Tax Reporting Requirements

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