My understanding is that the $20,000 IRS limit is for merchants who accept bitcoin via BitPay.
For people spending with BitPay, they initially requested KYC once you hit a limit of $3,000. This was then reduced to $250, and now I understand they
request KYC on everyone. They aren't requesting KYC from everyone just for fun. They are doing it because the government has told them to do it. Given that BitPay are
anti-privacy and cooperate with blockchain analysis, your only safe option is to assume the IRS have full details of every transaction you make using BitPay.