I recently came across some very interesting research data about the tax reporting behavior of Bitcoin investors. Assistant Professor Tyler Menzer from Texas Christian University spent several years analyzing data from the IRS, and the conclusions are quite eye-opening.

According to their findings, between 2013 and 2021, although about 12% to 21% of American adults had held cryptocurrencies, only 6.5% had actually reported transactions to the IRS. In other words, most cryptocurrency holders did not proactively report their taxes. Menzer candidly stated in an interview: this group has distinct characteristics—they tend to be younger, possibly have lower incomes, use different trading methods, and most importantly, their tax compliance is noticeably worse than traditional stock investors.

Interestingly, the high volatility of Bitcoin investments and crypto trading also seem to be factors. Many traders simply don’t consider tax implications when selling, possibly due to a lack of professional knowledge or because market fluctuations are too chaotic to keep track. Bitcoin has fallen about 40% from its all-time high last October, and in such a market environment, many people are rushing to cut losses, leaving little room for tax planning.

But the trend is shifting. The IRS has begun tightening reporting requirements for 2026, pushing crypto regulation closer to that of traditional stock markets. Exchanges like Coinbase are now required to issue transaction forms, and investors must honestly report their holdings—even if they haven't received the new 1099-DA forms, they must proactively report. Rules targeting wash sales and other compliance loopholes are also under review.

CoinTracker’s latest data also reflect the current situation: accounts holding crypto assets for less than a year had an average loss of $636 in 2025, while those holding for over a year averaged a profit of $2,692. On average, investors report about 836 transactions per year.

It seems the crypto community’s “libertarian anti-tax” philosophy is gradually waning. With the tax season approaching, these regulatory changes will have a tangible impact on the entire investor population.