> Customers don't because the IRS is ridiculous, presumably on purpose.
I have mixed feelings about the IRS too but people need to remember they are chartered to enforce the law as it is defined. The SEC and IRS has interpreted (IMO correctly) that according to current law and regulations crypto transactions are a taxable event as you describe. What you're not understanding is that many people actually appreciate this handling of crypto because of the benefit under current capital gains regulations (long-term capital gains). Another fundamental conflict in what crypto is and isn't, what the crypto community wants it to be, etc.
It's yet another one of those "crypto people don't understand the world as it is". They are trying to bend the world to them and not the other way around. It's not working and it never will. You're never going to have what is essentially product market fit if you live in an alternate universe like the crypto community.
> So it makes sense to exempt transactions below some threshold. But for this they apparently don't. Which is hard to explain outside of malice.
Contrary to popular belief in the crypto community there isn't some cabal scheming to "keep crypto down" or any such nonsense as we can see now by the traditional investment community trying to offer bitcoin ETFs, etc. It's an asset and even though the cryto community falls back to "it's about the tech", "save the world", etc in a bear market we all know they're actually all about gambling in fiat. Wait for a bull market for "have fun staying poor" and endless posts about the value in fiat to come back in full force. If anything it's just another thing to provide tax revenue to the US Treasury. They don't care what you're trading as long as you follow the tax code.
With the scheme you have described there are obvious avoision loopholes, such as people avoiding taxable events altogether by just executing all of their trades in amounts under the threshold. Then what do you do, come up with some complicated scheme to define it under total transaction amount in a year for a given entity? This will then be abused because there are all kinds of things you can do to game that. If such a legal framework were implemented I guarantee the next product from exchanges would be schemes to avoid taxation to automatically execute trades to fit your loophole.
The other issue is knock-on effects - this regulation would have to apply evenly across other asset classes as any language to specifically exempt crypto would also be nebulous and very gameable. Why should crypto have a fundamental tax advantage over other asset classes? The tax code is already a byzantine mess and this would only add to that.
> And then people say "well nobody wants to use it."
It's clear people don't want to use it, they want to gamble. There are and have been "pro-crypto" politicians but the number of voters who support this are the tiny handful of crypto zealots that don't remotely move the needle in an election. Crypto doesn't get votes because the vast majority of people see it for what it is - a toy to gamble with and once again the actual adoption numbers, demand, etc reflects that.