If you do the transactions with the KYC verified exchanges to convert your cryptocurrencies into cash, then you need to pay the taxation and government also will have the access for the transaction and they can able to track it easily.
If you convert the bitcoin or altcoins for cash in hand, then they cannot do the tracking.
Not always the case on exchanges that have KYC, it's still depends on the country because there are some that doesn't charge tax on cryptocurrency.
Also trading your cryptocurrencies to another person instead of an exchange doesn't mean you've avoided taxes. You still need to report them because if not eventually they'll find out and it's not good when those numbers add up.