Wall Street research firm Bernstein is forecasting a rebound in Bitcoin, arguing that the recent selloff could mark the transition away from the current bear phase and toward a new advance driven by institutional and corporate participation.

In a research report published Wednesday and seen by Cointelegraph, Bernstein expects Bitcoin to retake its 2025 high and push into fresh cycle highs over the next several years, with targets ranging from $125,000 by late 2026 to as high as $500,000 by the end of the decade under a bull case.

Key takeaways

• Bernstein expects Bitcoin to recover toward $125,000 by late 2026, positioning that level as a milestone tied to the firm’s cycle framework.
• The base case targets $150,000 by mid-2027 and a cycle peak of about $300,000 in 2029; the bull case ranges up to $500,000 in 2029.
• Bernstein maintains a longer-term Bitcoin target of roughly $1 million by 2033 in both scenarios.
• The firm links the forecast to Bitcoin’s historical four-year cycle phases and to the relationship between price and miners’ marginal production costs.
• Bernstein’s view is also intended to support its outlook on Strategy (the largest corporate Bitcoin holder), suggesting stronger conditions could enable further BTC accumulation.

Why Bernstein thinks the downturn is nearing an end

Bernstein’s argument is rooted in Bitcoin’s historical cycle behavior. The firm said Bitcoin gained 28% over the preceding 10 days after falling roughly 50% from its October 2025 peak, a rebound it says could indicate the end of the present bear cycle.

The report also points to changes in the market’s participant mix. Bernstein said institutional investors and corporate Bitcoin buyers have been playing a larger role, which it argues has provided greater downside support than in earlier cycles. As a result, it cited a smaller drawdown than the roughly 75% to 90% declines seen in previous turnarounds.

For investors, that matters because the cycle thesis implies the timing and character of drawdowns may not repeat identically. Bernstein is not only forecasting higher prices—it is also asserting that the depth of weakness may be structurally different when large, persistent buyers are part of the backdrop.

Cycle-based targets: from $125,000 to as high as $500,000

Bernstein’s pricing model is built on Bitcoin’s historical four-year cadence, which the firm ties to the halving event that reduces the amount of new BTC awarded to miners approximately every four years.

In its framework, each cycle is split into four phases: breakout, hype, drawdown, and accumulation. Bernstein then estimates likely price levels across those phases by comparing Bitcoin’s market pricing to the estimated marginal cost of producing new coins—specifically, the cost for the least efficient miners to mine Bitcoin.

Under the base case, Bernstein expects:

• Bitcoin to reach $125,000 by late 2026
• $150,000 by mid-2027
• about $300,000 at a cycle peak in 2029

Under the bull case, the firm raises the targets to:

• $200,000 by mid-2027
• $500,000 at a cycle peak in 2029

Bernstein also maintained a long-term target of about $1 million by 2033 under both scenarios.

How marginal production costs are folded into the forecast

Central to Bernstein’s approach is an assumption about the “price-to-marginal cost multiple,” meaning how many times Bitcoin’s price trades relative to miners’ estimated marginal production costs.

The firm said it expects that multiple to behave similarly to previous four-year cycles. In its base-case path, Bernstein projected the multiple falling from 1.4 times at a 2025 peak around $125,000 to roughly 1.25 times at a projected 2029 peak around $300,000, and to about 1.2 times by the $1 million mark in 2033.

This is a key nuance for readers: the forecast doesn’t rely only on generic “cycle hype” or momentum. It attempts to formalize the relationship between network economics and market pricing, which—if the assumptions hold—can help explain why the firm expects higher peaks even as valuation multiples compress over time.

Still, that compression is an assumption. Traders and long-term holders watching this thesis may want to track whether market conditions allow marginal-cost dynamics to remain a meaningful reference point, especially if demand growth, regulatory changes, or changes in miner behavior alter cost structures.

Strategy’s potential to buy more Bitcoin if prices firm up

Bernstein’s report also ties its Bitcoin recovery expectations to Strategy, describing a scenario in which continued strength could improve conditions for additional BTC purchases.

The firm noted that Strategy holds 840,447 BTC, representing about 4% of Bitcoin’s maximum supply of 21 million coins. Bernstein maintained an “Outperform” rating on the company but adjusted its MSTR price target down to $350 from $450, citing accelerated equity dilution and its updated view of the Bitcoin cycle.

Bernstein said that if Bitcoin stays strong—and if Strategy’s Stream (STRC) preferred stock recovers to around $100 (STRC was reported at $97.15 on Tuesday)—the firm believes Strategy could “go kinetic again” with additional Bitcoin buying. Bernstein pointed to a selloff of about 7,000 BTC in 2026 as part of its broader framework.

At the same time, Bernstein’s view is not only about upside. The report referenced analysis from Regime Intelligence arguing that Strategy’s Bitcoin treasury may be less threatened by a market crash than by a prolonged loss of capital-market access. That risk, Regime Intelligence said, could impair Strategy’s ability to fund roughly $1.76 billion in annual obligations without selling BTC.

Put differently, Bernstein is effectively forecasting that the next leg up could improve Strategy’s operational flexibility—but that access to funding channels could still determine how aggressively corporate buyers add to their holdings.

What to watch next

Bernstein’s model puts major milestones—$125,000 in late 2026 and substantially higher cycle targets later—at the center of its thesis. Investors should watch whether Bitcoin’s rebound broadens into sustained strength rather than a short-lived rally, and whether corporate buyers like Strategy can continue adding BTC without being constrained by financing conditions and dilution pressures.

Six long-dormant Bitcoin wallets have transferred 553.59 BTC worth $40.15 million after remaining inactive for periods ranging from nearly 12 years to more than 15 years.

Galaxy Research tracked the six movements from wallets dating to 2011, 2012, and 2014, although blockchain records do not reveal who controlled most of the addresses or why the owners transferred their holdings.

Five transfers went to addresses without known exchange links, offering no on-chain evidence that the Bitcoin was sold. The final transaction sent 40 BTC to an address labeled Boerse Stuttgart Digital, a German provider of crypto custody and trading infrastructure.

Bitcoin wallets move 553 BTC over 10 days

Beginning on Aug. 16, the first wallet transferred 8.54 BTC in block 962,770 after remaining inactive since June 13, 2011. Galaxy valued the holdings at about $538,000 when they moved, compared with an estimated acquisition price of around $14 per coin.

Using the difference between the historical and transfer prices, the holdings had gained about 461,981%. The figure represents an unrealized return unless the owner sold the coins, which the blockchain transaction does not establish.

Two days later, a wallet last active on Aug. 10, 2012, transferred 212 BTC worth approximately $13.66 million. The address carried the label “Noah Doe #1396 · Salomon Client Dusted,” connecting it to a New York lawsuit involving thousands of dormant Bitcoin addresses.

At an estimated historical price of $12 per BTC, the 212 BTC position had risen by roughly 557,640% when it moved. No public label identified the receiving address as an exchange or trading platform.

Hours after the 212 BTC transaction, another early holder moved 10.74 BTC. The coins had remained in place since June 17, 2011, and were worth about $692,000 at the time of the transfer. Neither side of the transaction had a public identity label.

Dormant-wallet activity resumed on Aug. 22, when two large transfers occurred within about two hours. One address moved 150 BTC worth $11.75 million after sitting inactive since Dec. 26, 2014.

Galaxy labeled the wallet “Noah Doe #1680,” making it the second address in the group connected to the New York case. Based on Bitcoin’s price when the address became inactive, the holdings had appreciated by an estimated 23,701%.

Three 2011 addresses move $10.37 million

Later on Aug. 22, a cluster of three addresses dating to 2011 transferred a combined 132.31 BTC in block 963,519. Galaxy valued the transaction at approximately $10.37 million.

The address beginning “1EG5DvjR” moved Bitcoin valued at $4.45 million, representing a potential gain of about 629,068%. A second address, beginning “1928FWqd,” transferred roughly $404,000 of BTC after its estimated value rose by 625,826%.

A third address, beginning “1EBzWeno,” accounted for $5.51 million of the total. Galaxy calculated that the holdings had appreciated by approximately 807,639%, based on an estimated original Bitcoin price of about $10.

On Aug. 26, the sixth wallet sent 40 BTC in block 964,127 after remaining inactive since May 28, 2012. The transaction occurred at 10:54 UTC and directed the holdings to an address labeled Boerse Stuttgart Digital.

Although the sender remains unidentified, the destination makes the movement different from the other five transfers, which went to addresses without public entity labels. The transfer to a custody provider does not by itself show whether the owner planned to sell, change custodians, or reorganize the holdings.

Galaxy estimated a cost basis near $5 per Bitcoin for the 40 BTC position. At the transfer price, its value had increased by approximately 1,535,911%, the largest percentage gain among the six wallets.

Large movements from old Bitcoin addresses have occurred repeatedly in 2026. On Aug. 20, 28 dormant wallets transferred 1,314.41 BTC worth $94.03 million, including 1,214.42 BTC from addresses created in 2014.

Earlier in July, a separate wallet transferred 5,908 BTC worth about $383 million after more than eight years without activity. The coins went to a new address rather than a publicly labeled exchange wallet.

New York case challenges dormant Bitcoin ownership

Two of the latest six wallets appear in a New York Supreme Court case brought by a pseudonymous plaintiff identified as Noah Doe and two Wyoming entities.

The lawsuit seeks control of 39,069 dormant addresses under Article 7-B of New York’s Personal Property Law, which covers lost property. The targeted addresses reportedly held about 3.7 million BTC when the complaint was filed, including wallets associated with Bitcoin creator Satoshi Nakamoto and the Mt. Gox hacker.

According to filings covered by crypto.news, New York Supreme Court Justice Kathy J. King paused the proceedings in June and blocked the plaintiffs from seeking a default judgment before a scheduled July hearing.

The plaintiffs had sent small “dust” transactions to thousands of addresses with messages intended to notify their controllers about the claim. Galaxy uses the term “Salomon-dusted” for addresses that received the notices, explaining the labels attached to two wallets in the latest group.

Activity from named wallets has affected the case because the complaint said that addresses that moved funds would be removed. In July, the plaintiffs dropped 44 wallets after they became active following the filing.

Galaxy Research head Alex Thorn said the removed addresses held 21,443 BTC when the lawsuit began. They later moved 46,334 BTC and held about 3,097 BTC when he reported the change.

“Every single one had moved coins onchain since the case was filed,” Thorn said on July 8.

M&A attorney Ian R. Cohen and the Digital Chamber have opposed the plaintiffs’ legal position. Their filings argue that a self-custodied Bitcoin address does not become abandoned solely because it has recorded no outgoing transactions for an extended period.

Security concerns may explain some old-wallet activity

Separate concerns about hardware-wallet security have also prompted long-term holders to move Bitcoin, though no public evidence directly connects four of the latest six wallets to a compromised device.

A firmware flaw affecting certain Coldcard devices led attackers to reconstruct weak seed phrases and drain Bitcoin beginning in late July. Galaxy estimated in early August that four attack waves had removed about 1,816 BTC from 5,294 addresses.

Coinkite, Coldcard’s manufacturer, traced the problem to a firmware change introduced in March 2021. The error weakened the randomness used to create seeds on some devices, making affected private keys easier to calculate than intended.

Wallets established in 2011, 2012, or 2014 predate the flawed Coldcard firmware, but their owners could have imported older keys into affected devices at a later date. No on-chain data cited by Galaxy confirms that such a migration occurred.

For US holders, merely moving Bitcoin between addresses under the same person’s control does not create a taxable disposal. The Internal Revenue Service states that a transfer between wallets, accounts, or addresses belonging to the same taxpayer is not a taxable event, although network fees paid with cryptocurrency may involve separate recordkeeping considerations.

Unstoppable Domains has dropped plans to seek ICANN recognition for its own Web3 domain extensions after finding that compliance, application, and auction costs would exceed the sales it expected to recover.

Unstoppable Domains says ICANN costs became too high

Unstoppable Domains said it did not submit ICANN applications for nine of its Web3 extensions, including .crypto, .wallet and .blockchain, before the 2026 application round closed. The decision ends its plan to add conventional DNS support to the affected blockchain-based domains.

According to the company’s founder, Matthew Gould, the expected cost of compliance, preparing each application, and competing in possible auctions exceeded the amount Unstoppable believed it could recover through domain sales. ICANN may place applicants into contention when two or more parties request the same extension, creating another potential expense beyond the initial application and evaluation process.

The company has notified affected customers by email and plans to refund purchases tied to extensions that it did not take into the 2026 application round. However, Unstoppable has not publicly released a complete list of eligible extensions, the amount covered by each refund, or the process customers must follow to receive their money.

Questions from holders have centered on whether refunds will cover every domain sold with the expectation of eventual ICANN recognition. Some customers said they retained their names because Unstoppable had repeatedly discussed bringing selected extensions into the standard internet system.

Gould responded that the domains will continue to operate as on-chain assets. Owners can still use supported names as readable aliases for cryptocurrency addresses and for other functions inside compatible wallets and decentralized applications, even though the names will not automatically work in conventional browsers through ICANN’s root system.

The decision ends a commitment dating to 2019

Since 2019, Unstoppable Domains has promoted the prospect that extensions such as .crypto and .wallet could eventually connect Web3 naming with the traditional internet. Gaining ICANN approval would have allowed an accepted extension to work through ordinary DNS infrastructure instead of relying mainly on compatible wallets, applications, browser settings or dedicated resolution services.

In June 2024, crypto.news reported that Unstoppable and Blockchain.com were preparing a .blockchain application for the next ICANN round. The companies said at the time that approval could allow .blockchain names to support normal websites and email while retaining Web3 functions.

Another partnership followed in May 2025, when Brave and Unstoppable launched the .brave domain for the browser’s users. Brave said the Polygon-based names could replace long wallet addresses, support decentralized websites, and operate across several blockchain networks. Both companies were also exploring an ICANN application that could bring .brave into the conventional DNS.

Without ICANN recognition, a blockchain domain and a DNS name using the same text can exist in separate naming systems. Standard browsers generally resolve ICANN-approved names by default, while Web3 names depend on supporting software. Owners may therefore retain their on-chain names without gaining the universal browser access previously tied to Unstoppable’s application plans.

For U.S. customers, the immediate effect is commercial rather than a new regulatory restriction. Unstoppable is based in the United States, while ICANN is a California nonprofit public-benefit corporation responsible for coordinating unique internet identifiers. Neither organization has said the refund plan changes the ownership of already-minted blockchain domains.

ICANN received more than 1,600 applications

ICANN opened the 2026 round on April 30 and accepted submissions for 15 weeks before closing the window at 11:59 p.m. UTC on Aug. 12. It was the first opportunity in years for companies, communities and other organizations to request new generic top-level domains.

In an Aug. 13 update, ICANN said it had received more than 1,600 primary applications. More than 1,100 also contained proposed replacement strings that could be considered if the preferred extension is unavailable or cannot proceed.

Most submissions arrived during the final days of the window, according to ICANN. The organization said the final count depended on applicants paying their evaluation fees, which were due either on Aug. 19 or seven days after the relevant invoice was issued, whichever date came later.

After an administrative review, ICANN plans to publish the public portions of the submissions on what it calls Reveal Day. The disclosure will identify the requested extensions, their applicants, and any strings sought by more than one party. Competing requests may then move through objection, evaluation, resolution, or auction procedures under the applicant guidebook.

Unstoppable has not withdrawn from ICANN-related business altogether. Gould said the company will continue participating as a service provider for partner applications, separating that work from the decision not to pursue its own established Web3 extensions.

Telegram and ENS are still pursuing conventional domains

Among the partner projects, Telegram has applied for .gram in the 2026 round, with Unstoppable acting as its registry service provider. Telegram founder Pavel Durov said ICANN approval could allow more than one billion users to register second-level addresses such as a username followed by .gram.

Durov also said Telegram users could build interactive websites linked to the proposed addresses using a single prompt. The company has not disclosed pricing, allocation rules or a launch date, while ICANN approval remains necessary before .gram can enter the standard domain system.

Ethereum Name Service has taken a separate route. Earlier in August, ENS token holders approved a foundation overhaul that created a five-member board and gave the reorganized entity authority to represent the protocol before ICANN and other internet standards bodies.

The ENS Foundation plans to pursue .ens as a conventional top-level domain, which could allow ENS-linked names to interact with browsers, websites and email services through established DNS infrastructure. ENS does not plan to seek .eth because three-letter country-code strings based on the ISO 3166-1 standard are reserved under ICANN’s application rules.

Chainalysis has estimated that potentially taxable onchain crypto activity exceeded $457 billion worldwide in 2025, while transactions within the practical reach of international reporting rules represented only 14% of the total.

Chainalysis said in an Aug. 26 crypto tax report that the other 86% included decentralized exchange activity, peer-to-peer transfers, onchain income and crypto payments that fall outside the practical scope of the OECD’s Crypto-Asset Reporting Framework.

The analytics firm examined realized gains, income, and payments across Bitcoin, Ethereum, Solana, Tron, BNB Smart Chain, and Base. Its income category covered mining, staking, lending, and gambling, while the payments estimate included merchant services and transfers that resembled peer-to-peer payments.

Activity recorded inside centralized exchanges was excluded because trades, staking, and lending conducted within their internal systems do not appear on public blockchains. The report also did not cover every blockchain, transaction type, or trading venue, leading Chainalysis to describe the $457 billion estimate as a “lower boundary.”

US crypto activity accounted for $112.6 billion

At $112.6 billion, the United States generated the largest amount of any country. Chainalysis divided the US figure into $64.6 billion in payments, $30.1 billion in gains, and $17.9 billion in income.

North America ranked first among regions with $134.6 billion, placing it ahead of the European Union at $125.1 billion and East Asia at $54.7 billion. Germany followed the US in the country table with $24.1 billion, while China accounted for $21 billion and the United Kingdom recorded $19.4 billion.

India ranked fifth with $19 billion, followed by Brazil at $16.1 billion, Canada at $15.1 billion, and Japan at $13.2 billion. Russia and Thailand generated an estimated $13 billion and $12.5 billion, respectively.

The calculations represent activity that could be taxable under commonly used rules rather than the amount of tax owed or unpaid. Chainalysis noted that local exemptions, tax rates, and classifications differ, meaning authorities would not collect the full value as revenue.

For US taxpayers, selling crypto for dollars, swapping one token for another, and spending digital assets can create taxable disposals under Internal Revenue Service rules. Mining and staking rewards can also count as ordinary income, while buying crypto with dollars or moving assets between wallets controlled by the same person generally does not create a taxable event, according to a recent US crypto tax guide.

US custodial brokers began filing Form 1099-DA for customer disposals made during the 2025 tax year. Gross proceeds are reported first, while cost-basis reporting phases in for covered transactions made in 2026.

According to Chainalysis, the US crypto tax gap was estimated at roughly $50 billion annually in 2022. The report cited congressional projections showing that Form 1099-DA could generate $28 billion in federal revenue over 10 years.

CARF captures activity handled by crypto intermediaries

Developed by the Organisation for Economic Co-operation and Development in 2022, CARF creates a system for participating tax authorities to exchange information about crypto transactions across national borders.

Reporting Crypto-Asset Service Providers, a category that largely covers centralized exchanges and brokers, must collect customer details and submit transaction data to the authorities with which they have a qualifying connection. Some retailers and wallet providers can also fall within the framework.

Data collection started on Jan. 1, 2026, in 48 jurisdictions, including the United Kingdom and members of the European Union. Most participating countries are due to begin exchanging the collected information in 2027, with other jurisdictions following in 2028 or 2029.

Closed order books operated by centralized exchanges offer tax agencies a clearer route to customer records because the platform normally knows who conducted each trade. CARF also covers some blockchain transactions, including certain deposits or withdrawals between a private wallet and an exchange when the transfer relates to a sale.

Even within that structure, CARF-covered events represented just 14% of the potentially taxable onchain activity found in the report. Chainalysis did not argue that the framework should be rewritten, saying its data can still give authorities information about transactions on platforms where most crypto trading occurs.

The EU is also implementing DAC8, which uses a scope similar to CARF while applying connection rules drawn from the Markets in Crypto-Assets framework. Under both systems, tax agencies can receive platform data even when a user conducts transactions outside their country of residence.

DeFi and private wallets leave transaction histories incomplete

CARF’s reliance on reportable service providers leaves much of decentralized finance outside its direct reach. A decentralized exchange may operate through smart contracts without a central custodian that controls customer assets or maintains complete identity records.

Private wallets create another gap because users can hold assets, interact with protocols, and transfer funds without passing through a reporting platform. Foreign services with no qualifying connection to a CARF jurisdiction may also sit outside its requirements.

Cost basis presents a separate problem. When a customer acquires crypto on one platform and later sends it elsewhere for sale, the receiving exchange may know the proceeds but not the original purchase price or holding period.

Historical records can remain missing because CARF does not apply retroactively. Aggregate reports supplied under the framework may also lack the transaction-level detail required to rebuild a complete sequence of wallet activity, according to Chainalysis.

Recordkeeping problems can increase when one investor uses exchanges, self-custody, staking, and liquidity pools. A public blockchain records contract calls and token transfers, but it does not automatically classify an event for tax purposes or establish the owner’s intent.

The same enforcement issue has appeared outside CARF’s first group of participating jurisdictions. South Korea has said its planned 22% crypto tax will cover income from private wallets and exchanges when the regime starts on Jan. 1, 2027, although its National Tax Service acknowledged practical limits in finding every unreported private-wallet transaction.

South Korean officials plan to use CARF and their overseas financial-account reporting system to obtain records from foreign platforms. Tax treatment for staking, lending, airdrops and hard forks remains under review as authorities prepare for the first returns covering 2027 income.

Blockchain records may supplement platform reports

To address missing platform data, Chainalysis said tax agencies can use blockchain analysis to follow transfers between wallet addresses, detect interactions with decentralized or foreign platforms, and identify income from mining, staking, lending, or liquidity provision.

Onchain records may also help reconstruct cost basis when assets pass through several wallets before reaching a reporting exchange. Linking those records to customer information from a regulated platform can give investigators a route from a transaction history to an identified taxpayer.

Such methods have already been used in tax investigations. In May, crypto.news reported that Italian authorities traced more than €1 million, or about $1.1 million, in alleged undeclared Ordinals gains after examining a seized hardware wallet.

Investigators in Foggia and Rome used exchange records and blockchain transaction patterns to follow proceeds from Bitcoin Ordinals and BRC-20 token sales, according to Chainalysis. The firm said the suspect allegedly created the assets, sold them for several times their original cost, and routed the proceeds back to a main Bitcoin wallet.

The U.S. Securities and Exchange Commission (SEC) has taken a procedural step toward rewriting how investment advisers and investment companies handle client custody rules—potentially including clearer guidance for crypto asset custody. The agency’s proposal was submitted on Aug. 25 to the Office of Information and Regulatory Affairs (OIRA), where it will undergo review by the White House Office of Management and Budget before returning to the SEC and, if approved, being opened for public comment.

According to the SEC’s regulatory agenda, the rules are intended to reduce uncertainty over how regulated firms may hold crypto for clients while complying with federal securities requirements tied to the Investment Advisers Act and the Investment Company Act. The SEC has not yet published the full proposal for public view, and OIRA retains the ability to request revisions before the SEC considers whether to advance the draft.

Key takeaways

• The SEC submitted “Amendments to the Custody Rules” to OIRA on Aug. 25, a necessary step before any potential public rulemaking.
• The proposal would address custody practices for investment advisers and funds, including how those entities may custody crypto assets for clients.
• The agency says the intent is to clarify compliance expectations and reduce uncertainty currently affecting institutional crypto custody.
• The broader context includes the SEC’s shift toward rulemaking under current leadership, as the CLARITY market-structure bill faces delays in Congress.

OIRA review marks a new phase for custody-rule changes

Under the U.S. regulatory process, submissions to OIRA are typically part of the administration’s review pipeline, which includes assessing potential economic impacts and other policy considerations. The SEC’s regulatory agenda indicates it is considering either amendments to existing custody rules or new provisions under the Investment Advisers Act and Investment Company Act.

The SEC’s agenda framing highlights compliance clarity as the core objective: institutions have needed more predictable standards for how they can custody digital assets while meeting securities-law obligations. Still, the proposal has not yet been released, so investors and service providers will have to wait to see the exact custody mechanisms and compliance conditions the SEC is considering.

The timeline also matters. Even after the OIRA review, the SEC must decide whether to issue the draft publicly for comment. In the meantime, the drafting remains in a pre-public phase, leaving the precise details—such as how the SEC plans to define permissible custodial arrangements for crypto—unknown.

Why crypto custody rules are now a focal point

Institutional participation in crypto markets has long been tied to custody infrastructure and compliance. Custody is not simply a technical function; it’s also a legal and regulatory question tied to fiduciary duties and the requirement to protect client assets. By exploring custody-rule changes for investment advisers and investment companies, the SEC is effectively aiming to address a practical bottleneck: when custody standards are ambiguous, regulated firms may be more cautious about offering crypto exposure to clients—or they may rely on arrangements that are harder to defend under existing guidance.

The SEC’s stated intent—to clear up uncertainty—suggests that regulators view the current framework as insufficiently clear for modern portfolio practices that increasingly include crypto. However, the proposal is still preliminary, and the fact that it is under review means the agency could adjust its approach after OIRA feedback.

Rulemaking momentum under SEC leadership

Multiple developments point to a broader strategic shift at the SEC. Since Paul Atkins became chair in 2025, the agency has increasingly emphasized formal rulemaking over what it previously treated as “regulation through enforcement.” Atkins pledged to change course by using established rulemaking channels to set industry expectations rather than relying primarily on enforcement actions to define the regulatory boundary.

That strategic shift is also reflected in past enforcement posture. Earlier coverage noted that the SEC dismissed several cases against major crypto companies in 2025, including its lawsuit against Coinbase, as it moved to reshape its approach to digital assets.

While the custody-rule proposal is not itself an enforcement action, it aligns with the same direction: creating clearer standards that regulated firms can plan around. If the SEC ultimately issues the draft for public comment and it advances to final rulemaking, the result could materially affect institutional compliance planning for advisers and investment funds that want to include crypto in client portfolios.

Congressional bill delays keep regulatory uncertainty in focus

The SEC’s custody initiative is unfolding while at least one other major policy effort remains stalled. As Bloomberg reported, the proposed rule is part of the agency’s broader push to advance the Trump administration’s digital asset agenda as the CLARITY market structure bill remains blocked in the Senate.

Earlier reporting from Cointelegraph noted that the CLARITY bill was expected to face a cloture vote after lawmakers return from the August recess in September. With that legislative path uncertain, regulatory clarity on custody and compliance could take on added importance for market participants—even if it comes through the SEC’s rulemaking process rather than Congress.

In other words, while the legislative debate over market structure continues, the SEC is also working on narrower but highly practical rules that govern how investment firms hold assets. For institutions, that distinction can matter: the ability to custody crypto within a clear regulatory framework may be a nearer-term determinant of product development and client offering viability.

What to watch next

Readers should focus on whether the OIRA review prompts changes to the draft and, crucially, whether the SEC eventually releases the custody proposal for public comment. The most important unknown is what specific custody standards the SEC will propose for crypto holdings, since that will determine how institutions adjust compliance processes and custodial arrangements.

Chainalysis estimates that potentially taxable crypto activity on major public blockchains reached at least $457 billion worldwide in 2025. But the firm argues that current international tax reporting rules will likely capture only a minority of that activity—leaving most onchain activity outside the data flows tax authorities can use.

In Chainalysis’ figures, the United States accounted for an estimated $112.6 billion, while North America led all regions with $134.6 billion. The European Union followed with $125.1 billion. The analysis focuses on realized gains, income from activities such as mining, staking and lending, and crypto-denominated payments across six major blockchains—while excluding activity conducted within centralized exchanges.

Key takeaways

• Chainalysis pegs potentially taxable onchain activity in 2025 at $457 billion globally, but most of it falls outside OECD’s Crypto-Asset Reporting Framework (CARF).
• CARF-covered transactions account for an estimated 14% of the taxable onchain activity Chainalysis identified, with 86% occurring beyond the reporting perimeter.
• The $457 billion estimate includes realized gains and onchain income streams (e.g., staking, lending) and payments, but intentionally leaves out centralized exchange trading activity.
• CARF requires covered providers to collect customer transaction and tax residency information and share it with tax authorities for cross-border exchange.
• Decentralized finance activity may remain largely uncovered because CARF is built around identifiable intermediaries and reporting obligations tied to centralized service providers.

A global onchain tax problem dwarfs what CARF can cover

Chainalysis’ report frames a central mismatch: taxable crypto behavior is heavily onchain and fragmented, while reporting obligations under CARF are structured around intermediaries that can be required to collect and report data.

According to Chainalysis, transactions that fall under CARF account for just 14% of the potentially taxable onchain activity it identified. The remaining 86% includes activity on decentralized exchanges, peer-to-peer transfers, onchain income streams, and crypto-denominated payments—types of activity that may not be routed through centralized, in-scope reporting entities.

This distinction matters for investors and market participants because tax outcomes depend on record availability. Even where taxable events occur on public blockchains, the ability for tax authorities to receive consistent third-party transaction information is limited when reporting requirements don’t extend to the underlying counterparties or decentralized infrastructure.

How CARF is meant to work—and when it starts

CARF was developed by the Organisation for Economic Co-operation and Development (OECD) and announced as a framework for reporting crypto-related customer transaction data to tax authorities. Under CARF, covered crypto service providers collect customer and tax residency information and report transaction data to their domestic authorities, which can then share information across borders.

In practical terms, Chainalysis points to a coverage design that focuses on intermediaries. CARF collection is set to begin on Jan. 1, 2026, in 48 jurisdictions, including the United Kingdom and European Union. For covered platforms, the framework also requires collecting additional customer and tax residency information from that date.

Investors should note that the start date is tied to reporting obligations placed on “covered” providers. The existence of a reporting framework does not automatically mean all onchain activity becomes reportable—coverage depends on whether transactions are processed through entities that fall within CARF’s defined perimeter.

Why DeFi may stay largely outside the reporting perimeter

A key reason for CARF’s limited coverage, Chainalysis suggests, is that CARF is oriented toward crypto intermediaries that facilitate transactions as a business. Colby Mangels, a former OECD adviser who worked on CARF, told Cointelegraph in January that the framework was designed around intermediaries that can be regulated and required to report.

That structure creates friction for decentralized finance. Much DeFi activity may involve no centralized operator in the traditional sense, and potentially no custodial relationship that triggers reporting obligations in the way CARF expects. As a result, decentralized exchanges, peer-to-peer transfers, and various onchain income mechanisms can remain outside direct reporting.

Still, the regulatory landscape is not static. Mangels said tax authorities are watching how anti-money laundering rules evolve, including efforts to determine when DeFi platforms—or their operators—could be treated as regulated crypto service providers. If and when that happens, the boundary between “covered” intermediaries and “uncovered” decentralized activity may shift.

What to watch next as reporting expands

Chainalysis’ estimates highlight an uncomfortable reality: even with CARF rolling out across dozens of jurisdictions, a large portion of taxable onchain activity may remain invisible to tax authorities unless reporting requirements extend to additional kinds of entities or data-generating processes. What matters next is how regulators decide whether and when decentralized platforms—or people operating them—become subject to the same reporting duties as centralized intermediaries.

Readers should watch the implementation details in CARF jurisdictions after the Jan. 1, 2026 rollout begins, as well as any regulatory movement that clarifies how DeFi participants fit into the “crypto service provider” concept. Those determinations will largely determine whether the 14% coverage figure can rise—or whether the reporting gap persists.