Italy's tax authority is aggressively expanded its digital surveillance toolkit. Italy's equivalent to the IRS teamed up with Chainalysis, and what they do is quite frightening. Their system automatically groups disparate wallet addresses controlled by a single private key or entity and then proceeds to map multi-hop transactions across DEXs. What next? They link self-custody wallets directly to individual identities by connecting on-chain transaction, which means it also links historical exchange withdrawals. Apparently, they already caught somebody who was hiding $1+ million. It gets worse (or better, up to you), when an Italian bank account receives a wire transfer from a known crypto exchange or fintech bank (Revolut, Kraken, Binance, N26), the AI checks whether the taxpayer declared their holdings.

In Italy (and other EU countries), reminder, there's a flat 33 percent tax on net crypto gains.