Opinion: Robin Singh, CEO of Koinly
In the Regulation and Bitcoin (BTC) record-breaking race, there’s no doubt that tax agencies will double their crypto tracking systems before Bitcoin reaches $1 million.
Crypto investors should not assume they can be complacent or skated until the price reaches a million dollars. In addition to focusing on their lasers, they are skilled at scrutinizing the past. Many jurisdictions have the power to backtrack the past few years, and if tax authorities are aware of how much they have missed, they don’t just slide it…
This could spell trouble for Bitcoiner who has received misinformation, who is already beginning to spend his profits.
Tax agencies catch up through automated data sharing
The government is still in this strange gray area where crypto tax rules can change at any time. For example, see the US Internal Revenue Service (IRS). In a shocking move in 2025, the IRS now requires investors to use per-wallet cost tracking methods and stop the Universal Wallet Act from allowing them. The latter is much more labor-intensive than the former, but it passes to more IRS data that it covets.
Automated data sharing with tax agencies may not be as extensive as stock market data, but it’s only a matter of time before centralized exchange cryptographic data catches up. Several crypto exchanges, including Coinbase and Binance.us, issue 1099-MISC to the IRS for users over $600 in the fiscal year.
The end of a sincere system
There will then be the Global Village Challenge, where tax institutions around the world take their own unique approach around the world. For example, the Australian Tax Office (ATO) automates stock costs and sales reporting through pre-filled data for taxpayers. However, encrypted data is not included in advance.
Instead, activities in central exchanges will trigger an alert on taxpayer tax returns, indicating that the ATO is aware of cryptographic activity. This leaves the taxpayer to be honest about whether they added capital gains or losses during the fiscal year.
Whether you sell or simply buy crypto, consistent alerts over the years without reporting from taxpayers can increase the risk of audits.
Globally, a sincere system lies on its deathbed. Once tax authorities have advanced the crypto monitoring system, if selected, they can be reviewed retrospectively from the previous year. ATO has reasonably intensive data matching programs with central exchange in jurisdictions.
If you value your sanity, a multi-year audit of your crypto portfolio is the last thing you want to deal with. All tax authorities are catching up, and accountants want to protect clients from being caught as compliance measures become more refined.
Tax Authorities to Strengthen Cooperation in the coming years
We should expect to see an increase in global tax data sharing across jurisdictions over the next few years. In March 2024, the Australian and Indonesian governments reached an agreement to exchange tax information. The key focuses on using cryptography.
A few months ago, in November 2023, 47 central governments, including the UK, Brazil, Germany and Japan, committed to the Crypto Asset Reporting Framework (CARF), and planned to activate exchange contracts for information sharing through 2027.
Recently: Indian crypto holders face a 70% tax penalty on private profits
Don’t operate under the assumption that decentralized finances and inappropriate tokens are flying under the radar. The tax authorities are fully aware of the profits made on decentralized exchanges. Institutions like the IRS have been delayed until 2027, but have already put in place guidance to collect user data from non-custoudial brokers.
Tracking may be more challenging, but while some investors believe that assets cannot be tracked until they move into central exchanges, tax authorities have already caught up. That’s not the “crypto industry knows best.” Tax officials are bringing more experts from the crypto space to help people understand how they try to bypass the system.
Opinion: Robin Singh, CEO of Koinly.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
