Crypto exchange Kraken says it filed 56 million crypto transaction forms with the US Internal Revenue Service (IRS) for tax year 2025. About 18.5 million of them covered transactions worth less than $1, and over half were for $10 or less.
Only 8.5% of the newly introduced Form 1099-DAs cleared $600, the threshold that triggers reporting for non-employee compensation, and 74% were for less than $50, the company said in a Wednesday blog post.
Each form is also sent to the customer and creates a reconciliation task for the taxpayer who receives it. On top of that, standard tax software does not handle crypto transactions. Kraken estimated the additional burden on an active crypto holder at $250-$500 per year for dedicated tax software, on top of standard filing costs.
“The hours taxpayers spend reconciling these microtransactions, often with incomplete data, generate costs that are wildly disproportionate to any revenue the IRS will collect from them,” Kraken said.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, the exchange said, and the National Taxpayers Union Foundation estimates the average time for non-business filers at about 13 hours and $290 per
Brokers reporting for 2025 provide gross proceeds without a cost basis, meaning the form shows what was sold but not what it was bought for. Kraken said it fielded thousands of client questions about forms that only captured one side of the calculation.
Two problems
Kraken pointed to two parts of the tax law that cause problems. One is the lack of one de minimisor low level, exemption for crypto payments, meaning that even small purchases with crypto can trigger a reportable taxable event.
“Imagine you walk into a Steak ‘n Shake and pay for a $7.99 meal with Bitcoin through a payment app. You’ve triggered a taxable event,” Kraken wrote as an example. “You are technically required to look up the cost basis of the specific Bitcoin you spent, calculate whether you had a gain or loss on that fraction of a coin, and report it on Form 8949.”
It’s the same argument that the libertarian think tank Cato Institute recently made. According to the institute, buying a cup of coffee every day with BTC “can result in over 100 pages of tax filings.”
The second issue is staking. Rewards earned on staked assets are treated as ordinary income at the time of receipt based on the market price of the token on that day. Most holders keep these tokens instead of selling them, which means they owe taxes on tokens that haven’t been sold.
If the symbolic price falls between receipt and surrender, the tax may exceed the current value of the asset. Kraken calls this phantom income and says a large portion of the sub-dollar 1099-DAs it issued were stake distributions.
Legislation moving through Congress includes a de minimis provision, but is limited to stablecoins. Kraken is pushing for a broader inflation-indexed exemption, paired with anti-abuse safeguards to prevent structuring.
The exchange is also asking Congress to let taxpayers choose when stake awards are taxed, either upon receipt under current rules or upon sale when a gain or loss is realized.
Kraken says its systems and those of other exchanges already support both reporting methods, but the choice must be approved.
