Cryptocurrency exchange Kraken has reported filing 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, as per a Wednesday blog post. Notably, approximately 18.5 million of these involved transactions valued below $1, while over half were under $10. A mere 8.5% of the newly implemented Form 1099-DAs exceeded $600—the threshold for non-employee compensation reporting—and a significant 74% were less than $50.
These forms are dispatched to customers and necessitate reconciliation by taxpayers, which is complicated further as standard tax software does not accommodate crypto transactions. Kraken estimates that the additional burden on active crypto holders amounts to $250-$500 annually for dedicated tax software, in addition to regular filing costs.
“The considerable time spent by taxpayers reconciling these micro-transactions, often with incomplete information, results in expenses vastly out of proportion to any revenue collected by the IRS from them,” Kraken stated. The Tax Foundation estimates that individual returns impose a $146 billion cost on Americans annually due to time and expenses, according to Kraken’s report. Meanwhile, the National Taxpayers Union Foundation cites an average of 13 hours and $290 per return for non-business filers.
For 2025, brokers provide gross proceeds without cost basis details, meaning forms only indicate sales amounts but not purchase prices. This has led to numerous client inquiries at Kraken about forms capturing just one part of the calculation.
Kraken highlighted two tax code issues causing complications. The first is the absence of an ade minimis exemption for crypto payments, resulting in even minor purchases with cryptocurrency triggering taxable events. For instance, paying $7.99 for a meal at Steak ’n Shake using Bitcoin via a payment app creates a taxable event requiring specific Bitcoin cost basis lookup and reporting on Form 8949.
The Cato Institute has made similar arguments, noting that purchasing coffee daily with BTC could lead to over 100 pages of tax filings. The second issue concerns staking; rewards from staked assets are considered ordinary income upon receipt based on the token’s market price that day. Many holders retain these tokens, incurring taxes despite not selling them. If token prices drop between receipt and filing, taxpayers may owe more than the current value—a situation Kraken refers to as phantom income.
A substantial portion of sub-dollar 1099-DAs issued by Kraken pertained to staking distributions. Legislation under consideration in Congress includes an ade minimis provision for stablecoins, but Kraken advocates for a broader inflation-indexed exemption with anti-abuse measures.
Kraken urges Congressional approval allowing taxpayers to decide when staking rewards are taxed—either at receipt or upon sale when gains or losses manifest. The exchange claims its systems and those of others already support both reporting methods; however, taxpayer choice must be authorized.