Most crypto investors assume that if a 1099-DA lands in their inbox, they are covered, and if it does not, neither does the IRS. Both assumptions are increasingly wrong.
A new Chainalysis report maps $457B in potentially taxable crypto activity globally in 2025 and lays out exactly how enforcement is shifting from form-based to wallet-based. The details are worth understanding before filing season.
Chainalysis estimates that 86% of on-chain taxable activity falls outside what frameworks like CARF (the OECD's Crypto-Asset Reporting Framework) can directly capture. Form 1099-DA covers broker reporting on centralized platforms. It does not reach self-custody wallets, decentralized exchanges, DeFi protocols, staking, lending, peer-to-peer payments, or foreign platforms. That is not a loophole. It is a structural gap in third-party reporting, and it does not mean the activity is invisible.
Blockchain Analytics Can Connect What Brokers Cannot When a taxpayer withdraws crypto from a centralized exchange into a private wallet, the exchange knows the taxpayer. The blockchain shows where the assets move next. Blockchain analytics tools can potentially connect those two pieces. Chainalysis describes how tax authorities can use wallet clustering and attribution, which is the process of grouping related wallet addresses and identifying who controls them, to map DEX activity, bridges, peer-to-peer transactions, and interactions with specific services. Enforcement can effectively become wallet-based rather than form-based.
Your 1099-DA May Also Be Incomplete on Its Own Even for activity that does appear on a 1099-DA, the form has real limits. A broker may know that a taxpayer sold an asset but not where it was originally purchased, what the correct cost basis is, what happened while the asset sat in self-custody, or other transactions involving that same asset. Receiving a 1099-DA does not mean the information it contains is sufficient to file accurately.
Your Own Records Are the Only Complete Picture The practical implication is straightforward. Crypto taxpayers need complete books and records across every exchange and wallet they use, not just the accounts that generate a 1099-DA. As 1099-DA reporting expands and the IRS gains more third-party data to compare against taxpayer-filed returns, the gap between what you report and what can be reconstructed from broker data plus blockchain data becomes a meaningful audit risk. Your own records are what allow those pieces to reconcile correctly. Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a qualified tax professional.