Non-Custodial Reporting

Definition ∞ Non-custodial reporting refers to the disclosure of financial activities or asset holdings where a third party does not hold the assets. This type of reporting is relevant for individuals or entities who maintain direct control over their digital assets, typically in self-hosted wallets. It focuses on documenting transactions and balances without relying on an intermediary’s records. Such reporting is essential for tax compliance and personal financial management in decentralized contexts.
Context ∞ Non-custodial reporting is a significant point of discussion in crypto news, particularly concerning regulatory efforts to track digital asset transactions for tax purposes. A central debate involves the technical challenges of identifying and aggregating transaction data from self-custodied wallets while respecting user privacy. Future regulatory guidance may provide clearer methods for individuals to self-report non-custodial activities, possibly leveraging on-chain analytics tools. This area represents a key challenge for governments seeking to gain oversight of decentralized financial activity.