Italian authorities have cracked a sophisticated tax evasion scheme involving Bitcoin Ordinals and BRC-20 tokens, with blockchain analytics firm Chainalysis confirming that the public ledger left an indelible trail. The Guardia di Finanza in Foggia and Rome traced over €1 million in undeclared gains from a suspect who had used these novel crypto assets to generate and conceal income.
According to Chainalysis, the investigation began as a routine probe into unreported earnings. However, analysts soon discovered that the suspect had exploited Bitcoin Ordinals—which allow data to be inscribed onto individual satoshis—and BRC-20 tokens, a token standard that uses text inscriptions to create and transfer assets without smart contracts. The individual minted, listed, and sold these tokens, funneling profits back into a main Bitcoin wallet while also receiving public subsidies.
Chainalysis emphasized that the technical novelty of cryptocurrencies does not equate to anonymity. Despite the complexity of Ordinals and BRC-20 tokens, every transaction remains permanently recorded on the blockchain. In this case, exchange records combined with on-chain patterns enabled investigators to link wallet activity to a specific individual.
This incident underscores ongoing gaps in crypto tax reporting on a global scale. A 2026 study published in the Review of Accounting Studies found that IRS data captured only 32% to 56% of estimated U.S. crypto owners, based on survey comparisons. Similarly, a National Bureau of Economic Research working paper on Norway revealed widespread noncompliance even among investors using exchanges that share identity data with authorities. The paper suggested that enforcement should be targeted or low-cost, as many crypto investors owe relatively small amounts.
The U.S. Internal Revenue Service has projected a gross tax gap of $696 billion for tax year 2022, with underreporting accounting for $539 billion of that figure. Lawmakers are now debating measures to address crypto tax complexities, such as the PARITY Act, which would require the Treasury to study small crypto payment tax relief and issue guidance without creating an immediate exemption. Additionally, Kraken filed 56 million crypto tax forms for 2025, with the majority tied to transactions under $50, prompting the exchange to call for higher reporting thresholds and simplified rules for low-value transactions.
Staking rewards are also under scrutiny, as 18 bipartisan House lawmakers have urged the IRS to revisit its 2023 guidance before 2026, proposing that taxpayers be allowed to defer some staking and mining tax liabilities. Chainalysis reiterated that while crypto users may turn to new asset types to hide gains, public blockchains leave permanent records that investigators can trace, as demonstrated in this Italian case.