<div id="readability-page-1"><div>Tax dodgers have started turning to Bitcoin Ordinals, BRC-20 tokens and other digital methods in an attempt to hide their wealth from tax authorities, according to blockchain analytics platform Chainalysis.“Tax evasion and unreported income are age-old financial crimes, but the methods used to commit them are rapidly evolving,” Chainalysis said in a report Wednesday.“As digital assets become more mainstream, bad actors frequently attempt to exploit novel technologies — such as NFTs, decentralized finance protocols, or emerging token standards — in hopes of keeping their wealth hidden from tax authorities and law enforcement.”Tax authorities have been scrambling to catch up with technological advances and to track and apply taxes. A March study estimated that only 32% to 56% of US crypto owners report their gains. In Norway, that percentage was only 12%, according to a study from August 2024.<figure></figure>Source: ChainalysisItalian authorities uncover $1 million tax evasion schemeChainalysis reported that Italy’s Economic and Financial Police Unit in Foggia reportedly uncovered a tax evasion scheme in which an individual allegedly used Bitcoin Ordinals and the BRC-20 token standard to hide 1 million euros ($1.1 million) in undeclared capital gains.Introduced in 2023, the Ordinals protocol assigns a serial number to a satoshi, the smallest unit of Bitcoin, and allows data, such as images or text, to be embedded in a Bitcoin transaction. The BRC-20 standard, built on top of it, allows text inscriptions to be deployed, minted into tokens and transferred on the Bitcoin blockchain.Italian authorities discovered during their investigation that the suspect was using the Ordinals protocol and the BRC-20 standard to create tokens, then sent them and listed them on marketplaces, according to Chainalysis.“The assets were sold for multiples of their original cost, and the profits were routed back to the suspect’s primary wallet in Bitcoin,” Chainalysis said. “The suspect continually reinvested these earnings into new inscriptions.”Blockchain intelligence essential infrastructureThe US Internal Revenue Service estimates that the gross tax gap, the government’s best estimate of the total tax it is legally owed but did not receive, is about $606 billion. Tax evasion tactics usually include paying in cash and underreporting income.However, Chainalysis said using crypto for tax evasion comes with a “fatal flaw” because of the “inherent transparency of the blockchain. No matter how sophisticated a scheme appears, the underlying technology leaves a permanent immutable trail.”Blockchain intelligence can reconstruct a financial network and cross-reference it with data that crypto exchanges are required to report to unmask transactions tied to suspected tax dodgers, according to Chainalysis.“This landmark Italian case serves as a powerful reminder for law enforcement and compliance professionals globally: the technical novelty of crypto does not equal anonymity,” it said.“As new digital asset classes continue to emerge and generate income streams, the gap between actual on-chain wealth and declared tax positions will become a primary target for global investigative attention. In today’s financial landscape, blockchain intelligence is essential infrastructure.”</div></div>

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Tax evaders are increasingly using Bitcoin Ordinals and BRC-20 tokens to conceal wealth from authorities, according to Chainalysis. A report highlights that only 32% to 56% of US crypto owners report gains, with even lower rates in Norway. Italian authorities uncovered a scheme involving $1.1 million in undeclared gains using these digital assets. Despite the sophistication of these methods, Chainalysis emphasizes the transparency of blockchain technology, which can expose tax dodgers through immutable transaction records.

- Tax evasion tactics are evolving, with individuals using Bitcoin Ordinals and BRC-20 tokens to hide wealth from authorities, as reported by Chainalysis.  
- In Italy, authorities uncovered a scheme where a suspect allegedly concealed €1 million in undeclared gains using these digital assets.  
- Despite the innovative methods, the inherent transparency of blockchain technology allows for tracking and identifying tax dodgers, highlighting the importance of blockchain intelligence in combating financial crimes.

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Tax evaders are trying ‘novel digital assets’ to dodge authorities: Chainalysis