2022 study finds that 99.5% of cryptocurrency investors did not report taxes
A recent study claiming that 99.5% of crypto investors did not pay taxes in 2022 has been questioned due to the methodology used to arrive at the estimate. The report itself acknowledges that search volume data may not accurately reflect the actual number of crypto taxpayers, as not everyone who pays tax searches for crypto tax-related information online.
The methodology also assumed that the number of searches related to crypto tax reporting did not vary across different countries, and warned of potential biases towards countries with greater internet accessibility and more accurate search volume data.
Danny Talwar, global head of tax at crypto tax software Koinly, disputed the report’s claim, stating that it is likely not reflective of countries with specific crypto tax guidance and strict compliance requirements such as the USA, Canada, Australia, and India.
Similarly, Greg Valles, a chartered accountant and board member of Blockchain Australia, could not confirm the methodology’s accuracy.
Both tax experts emphasized that it is becoming increasingly difficult to avoid crypto taxes, given the government’s data matching and surveillance efforts. Valles warned that failure to report crypto profits now may lead to repercussions in the future as government technology becomes more sophisticated and specialized.
Talwar noted that while non-compliance for crypto is comparatively higher than other asset classes, tax authorities in many countries have processes in place to obtain data from crypto exchanges. He also stated that awareness of crypto tax reporting duties has increased considerably among investors in jurisdictions with strict compliance requirements, with only 15% of surveyed crypto investors being unaware of their obligations.