75% of Crypto Investors Do Not Comply with IRS Tax Reporting Requirements, and New Wallet-by-Wallet Cost Basis Rules Create Impossible Compliance Burdens

Only approximately 25% of U.S. cryptocurrency investors voluntarily comply with their federal tax obligations, and the IRS's new wallet-by-wallet cost basis requirement (effective tax year 2025) forces taxpayers to track the purchase price of every token in every individual wallet separately rather than aggregating across accounts. Why it matters: the average active crypto user holds assets across 3-5 wallets (hardware wallets, exchange accounts, DeFi protocols), so each wallet now has its own independent cost basis ledger; so a user who bought ETH at $1,000 on Coinbase and $3,000 on MetaMask can no longer average these costs when selling from either wallet; so taxpayers must reconstruct years of transaction history across wallets that may have interacted with dozens of DeFi protocols, bridges, and DEXs; so the compliance cost in time and software subscriptions ($50-$500/year for crypto tax tools) exceeds the tax liability for the majority of small investors; so non-compliance remains the rational economic choice, creating a massive tax gap that the IRS estimates at billions annually. The structural root cause is that the IRS designed crypto tax rules (Notice 2024-57, Form 1099-DA requirements) by analogy to traditional brokerage accounts, but on-chain transactions across self-custodied wallets, DeFi protocols, and cross-chain bridges generate transaction volumes and complexity that are orders of magnitude beyond what traditional tax infrastructure can handle.