A March 2026 academic paper found a wide gap between crypto ownership in the US and tax reporting to the Internal Revenue Service. Surveys cited in the study estimated that 12% to 21% of American adults had owned cryptocurrency before 2021, yet only 6.5% of taxpayers reported crypto sales to the IRS.
Paper draws on millions of anonymized tax returns
The paper, titled Who reports cryptocurrency to the IRS?, was written by Tyler Menzer of Texas Christian University’s Neeley School of Business, Jeffrey Hoopes of the University of North Carolina’s Kenan-Flagler Business School, and Jaron Wilde of the University of Iowa’s Tippie College of Business. Menzer obtained millions of anonymized IRS tax records through academic channels, and the research examined reporting behavior tied mainly to Bitcoin and Ether sales from 2013 to 2021.
The period matters. It ends before spot crypto ETFs were approved in early 2024, so the study reflects a market still dominated by retail participants rather than the investor mix seen after institutional money entered in larger size.
Researchers describe crypto investors as a distinct taxpayer group
In comments to Bloomberg, Menzer said cryptocurrency owners were more likely than other investors to also own meme stocks. He described them as younger and possibly somewhat lower income, adding that the main takeaway was that they represented a distinct group of taxpayers and investors with different trading patterns and different compliance characteristics. He also said many people probably were not reporting their holdings to the IRS.
The study observed that crypto traders were more likely to sell positions frequently and appeared less sensitive to tax consequences when making trading decisions. That mix of active trading and weak tax awareness stood apart from what the authors associated with more traditional equity investors.
CoinTracker snapshot shows the scale of the filing burden
Data from crypto tax software company CoinTracker for the 2025 tax year adds another layer. According to the company, the average crypto investor had to report 836 transactions in a year. Just compiling those records can be a barrier on its own.
Performance data in the same snapshot showed a split between short-term and long-term holders. Investors who held for less than one year posted an average loss of $636, while those who held for more than one year posted an average gain of $2,692. The numbers suggest that frequent short-term trading came with both higher tax rates and weaker returns.
Market structure has changed, but the reporting gap remains in focus
Bloomberg’s Olga Kharif noted that the market changed after spot ETFs were approved, with shifts in investor composition and broader use of compliance tools such as exchange-issued 1099 forms and tax software. Even so, she pointed to a structural mismatch: the IRS has struggled to keep pace with the growth of the crypto market. The agency did not immediately respond to Bloomberg’s request for comment.
For the 2013-2021 period covered by the paper, the key point is simple. Crypto ownership was far more common than tax reporting, and the 6.5% reporting figure captures that gap in a single number.