Blockchain forensics and regulatory technology for crypto tax compliance : a state-of-the-art review and emerging directions in the South African context

Abstract

The rise in Blockchain-based digital assets has transformed the financial ecosystems, which has also created complex governance and taxation challenges. The pseudonymous and cross-border nature of crypto transactions undermines traditional tax enforcement, leaving regulators such as the South African Revenue Service (SARS) reliant on voluntary disclosures with limited verification mechanisms, while existing Blockchain forensic tools and regulatory technologies (RegTechs) have advanced in anti-money laundering and institutional compliance, their integration into issues related to taxpayer compliance and locally adapted solutions remains underdeveloped. Therefore, this study conducts a state-of-the-art review of Blockchain forensics, RegTech innovations, and crypto tax frameworks to identify gaps in the crypto tax compliance space. Then, this study builds on these insights and proposes a conceptual model that integrates digital forensics, cost basis automation aligned with SARS rules, wallet interaction mapping, and non-fungible tokens (NFTs) as verifiable audit anchors. The contributions of this study are threefold: theoretically, which reconceptualise the adoption of Blockchain forensics as a proactive compliance mechanism; practically, it conceptualises a locally adapted proof-of-concept for diverse transaction types, including DeFi and NFTs; and lastly, innovatively, which introduces NFTs to enhance auditability, trust, and transparency in digital tax compliance.