I assume that most mom and pop investors will use the same exchange to buy their bitcoin and then later sell them. In that case the IRS can see both transactions in their account and know the capital profit/loss they have not declared.
If you buy at one exchange and then transfer the coins to another to sell it would be harder for the IRS to match up and discover your profit/loss. Especially if you move the coins via several intermediaries and sell in a different country that is not under the IRS jurisdiction.
You can still track the transactions though - or specifically IRS or LE can request history from the exchanges. Some exchange in the chain may not be under the IRS jurisdiction, but if you want to actually withdraw your money, you'll have to do it either by buying something, via local organisation in cash, or in another country. I.e. it's not that much harder to track than if you did it in cash (rather than btc), which has the same pros/cons if you're in the US.
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I assume that most mom and pop investors will use the same exchange to buy their bitcoin and then later sell them. In that case the IRS can see both transactions in their account and know the capital profit/loss they have not declared.
If you buy at one exchange and then transfer the coins to another to sell it would be harder for the IRS to match up and discover your profit/loss. Especially if you move the coins via several intermediaries and sell in a different country that is not under the IRS jurisdiction.
You can still track the transactions though - or specifically IRS or LE can request history from the exchanges. Some exchange in the chain may not be under the IRS jurisdiction, but if you want to actually withdraw your money, you'll have to do it either by buying something, via local organisation in cash, or in another country. I.e. it's not that much harder to track than if you did it in cash (rather than btc), which has the same pros/cons if you're in the US.
And I don't think exchanges will ever protect anyone if the LE asks, because of the know your customer rules (https://en.m.wikipedia.org/wiki/Know_your_customer)