> I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated...
Not really, so long as the IRS and taxes remain a thing. And someone notices the guy who hasn't had a job in the last five years is driving around in a brand new Tesla and living it up in a mansion.
Perhaps, but I think you assume a much greater level of enforcement than actually exists.
Most tax evasion enforcement is on relatively small subset of taxpayers and is for fairly easy-to-detect fudges. There has been a lot of work between the IRS and banks to set up heuristics and flag suspicious activity, but that all ends up pretty worthless with an anonymous cryptocurrency.
You're assuming that in a world with only anonymous cryptocurrency there won't be banks and credit cards and the like. Keeping cryptocurrency saved on your personal hard drive with backups or something is equivalent to keeping your money under your mattress today. Banks provide you with interest on your savings and security.
I suspect in a world with only cryptocurrency instead of fiat, trying to make a direct peer-to-peer transaction to purchase an expensive item like a house or car will be met with the same reaction as trying to do that today with a duffel bag full of cash.
There's no need to suspect - looking at the regulations, it seems that the standard AML/KYC laws everywhere in the first world already require anyone selling anything large with an untraceable payment instrument (i.e. anything other than through a financial institution; which commonly means cash, but not exclusively so, bags of diamonds or Monero count as well) is required to report the transaction and the identity of the customer.
It doesn't mean that everyone reports that, quite the contrary, but all legitimate businesses do and will.
Not really, so long as the IRS and taxes remain a thing. And someone notices the guy who hasn't had a job in the last five years is driving around in a brand new Tesla and living it up in a mansion.