The uncertainty surrounding the Internal Revenue Service's (IRS) stance on cryptocurrency taxation has left many investors wary, fearing retrospective changes that could affect their filings.

Experts, like Clinton Donnelly from Crypto Tax Audit, highlight the complexity and fear that stem from the IRS's potential to apply laws retroactively, especially in the fast-evolving crypto sector.

The IRS's Notice 2014-21 aimed to clarify tax obligations for virtual currency transactions but its non-regulatory nature has only contributed to the ongoing uncertainty among cryptocurrency users.

The requirement to amend past tax returns following IRS clarifications, such as with Form 8938 for foreign assets, underscores the difficulties and risks faced by taxpayers in the crypto space.

This environment of fear and uncertainty is discouraging crypto investors from filing their taxes, risking significant penalties and complicating the broader adoption of cryptocurrencies like Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH).