Global crypto tax reporting still has significant flaws, and tokenized stocks might be the catalyst prompting a necessary update.
Recently, platforms like Robinhood and Gemini have begun offering tokenized stocks to users in the EU. These blockchain-based derivatives mimic the price movements of actual equities such as Apple and Tesla, allowing users to trade around the clock without the restrictions of traditional market hours.
This might appear to be a progressive step for accessibility and innovation. However, if these products continue to gain popularity, and firms like Galaxy Digital predict they will draw liquidity away from traditional exchanges, regulators will face increasing pressure to address the reporting gap between crypto platforms and conventional brokers.
Despite the advancements made by the crypto industry, tax reporting lags significantly behind that of traditional asset exchanges in many regions.
A prominent example is Australia. The Australian Stock Exchange supplies the tax office with organized data, including sale prices, dates, and proceeds, which are automatically included in users’ returns.
Conversely, the ATO’s approach to crypto is more like a gentle reminder to taxpayers. It issues notifications prompting users to check for taxable events rather than providing a detailed, pre-filled report. While the ATO acknowledges taxpayer activity in crypto due to exchange reports, it lacks the comprehensive oversight it maintains for stock trading.
This approach may have been reasonable during crypto’s early days, when most activities were linked to speculative tokens or NFTs. However, as platforms look to broaden their offerings of tokenized stocks globally—potentially considering entry into the Australian market—the absence of tax transparency becomes increasingly difficult to justify.
Governments cannot afford to overlook potential tax revenue simply because transactions occur on-chain. As tokenized stocks gain attention in the coming months, regulators will likely rush to ensure they are adequately prepared.
In the U.S., the IRS is already working to catch up. Its new crypto reporting rules, including the upcoming Form 1099-DA, are set to be implemented in 2026. These will mandate crypto brokers to report user transactions similarly to traditional financial institutions.
Additionally, Robinhood is reportedly preparing to introduce tokenized stocks for U.S. customers.
This raises a pertinent question: will this rollout align with the new IRS requirements?
Globally, the OECD’s Crypto-Asset Reporting Framework (CARF), also slated for 2026, will mandate transaction data sharing across jurisdictions, akin to how banks adhere to the Common Reporting Standard.
If tokenized stocks are set to replicate real equities, then tax data reporting must align accordingly.
The era of crypto operating in a regulatory gray area is coming to an end. Whether platforms are prepared or not, the age of complete tax transparency is approaching, and tokenized stocks may serve as the pivotal moment that brings it to fruition.
I anticipate that this moment will occur within the next five years.
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