(*4*)Because of this public transparency, it is very easy for the IRS to link "anonymous" wallets to people. In fact, at the beginning of almost everyone's transaction history is an on-ramp through know-your-customer (KYC) rules that exchanges like Coinbase must follow. These exchanges are required to report customer activity to the IRS, which provides the agency with information about users. From this on-ramp, if assets are sent to a decentralized wallet provider or non-KYC exchange, the IRS can track those transactions and easily associate each new wallet with the person who funded it. If you buy ETH on Coinbase, send it to Metamask and then switch to Avalanche, the IRS will associate the Metamask and Avalanche wallet with the Coinbase KYC account that funded the wallets, revealing the owners of the wallets.