Users of digital assets are increasingly concerned about filing crypto tax returns as on-chain volume continue to rise.
These issues are arising as many countries are adopting the Crypto-Asset Reporting Framework (CARF). The purpose of this new regulation is to thoroughly address long-standing loopholes in the tax oversight of cryptocurrencies.
IRS requirements for crypto tax reporting in the US.
To put it simply, the U.S. Internal Revenue Service (IRS) considers digital assets as property and requires you to declare income and profits or losses arising from transactions such as buying, selling, paying for services, Staking, Airdrop, and many others.
It's important to note that simply holding cryptocurrency is not subject to tax or profit/loss calculations because no taxable transactions have occurred yet . Taxes only apply when you sell the asset and receive cash or exchange it for another type of crypto. At that point, the profit or loss is considered "fixed," meaning it must be declared and taxed.
"Remember that most types of income are taxable. If you don't report them truthfully, you could be fined and charged late payment interest," according to IRS guidance .
For the 2025 tax year, the IRS filing deadline is April 15, 2026, unless it falls on a weekend or holiday. Taxpayers can also request an extension to October 15, 2026; however, this extension applies only to filing, not to tax payment.
Retail investors highlight the challenges of filing crypto tax returns amid high-volume trading.
Although tax guidelines are fairly clear , implementation is quite complex. For investors who trade frequently, aggregating data from centralized exchanges, decentralized exchanges, blockchain bridges, liquidation pools, Derivative platforms, and managing multiple wallets becomes a significant challenge.
If transaction classifications or Capital calculations are incorrect, the reported profit/loss figures will be significantly inaccurate.
"The danger lies in the fact that the burden of proof rests with the taxpayer… So if you don't keep careful records of transactions, you could run into big trouble," a crypto tax consulting service Chia .
This issue is most prominent among high-frequency traders. For example, an investor named “Crypto Safe” claimed to have executed over 17,000 transactions across multiple blockchains in 2025 alone.
This investor also Chia that current tax calculation software can aggregate transaction history, but still cannot automatically calculate the exact tax amount – unless each transaction is verified entirely manually.
"So this year, I'm only paying taxes on the money I withdraw from the bank, because it's really impossible to calculate the profit/loss for each small transaction myself," this person wrote in a post .
According to this investor, this method could cause them to overpay between $15,000 and $30,000 in taxes compared to what they should have paid. This has attracted the attention of many other investors.
"Every year since 2012, I've been paying more taxes than I should," a market Watcher further Chia .
Another investor, nicknamed "Snooper," stated that filing crypto tax returns, especially for large volume , requires the use of advanced tools, proficiency in using blockchain explorers, and manually re-entering transaction data. Even with the right tools, the process remains very complex.
These cases demonstrate that proper tax compliance increasingly requires technical expertise that goes far beyond standard accounting practices .
Global cryptocurrency tax report enters a new phase.
Meanwhile, 2026 marks a major turning point in global crypto tax regulations across many countries. As of January 1, 2026, 48 countries have implemented CARF.
Under this regulatory framework, digital asset service providers must collect additional customer information, verify users' tax nationality, and submit annual reports on account balances and transaction activities to the local tax authorities.
This data will then be Chia among countries based on existing international information- Chia cooperation agreements. The first automated Chia phase is expected to take place from January 1, 2026, which is also the deadline for countries to enact appropriate legal frameworks and reporting procedures.
The participating countries include the UK, Germany, France, Japan, South Korea, Brazil, and many other EU countries. The US, Canada, Australia, and Singapore will join at a later stage.
To date, a total of 75 countries have committed to implementing CARF. However, this move has also met with considerable opposition within the community.
“Collecting crypto tax data has already begun in 48 countries before CARF takes effect in 2027. It’s hard to imagine having to pay taxes on crypto even though the government doesn’t print it itself. This is the downside of regulation – although it offers many benefits, privacy for crypto users is no longer what it used to be,” commented Brian Rose, Founder and host of London Real.
These developments highlight the widening gap between regulatory expectations and investors' actual performance. While the government is developing a reporting system, many investors still rely on tools that are not yet capable of effectively handling large-scale operations across multiple chain .
As tax policies globally become increasingly stringent, crypto users frequently face significant pressure to establish rigorous tax compliance procedures, otherwise they risk underreporting, incurring higher taxes, or becoming embroiled in disputes with tax authorities.
