Cryptocurrency exchange Kraken said it filed 56 million cryptocurrency transaction forms with the U.S. Internal Revenue Service (IRS) during the 2025 tax year. About 18.5 million of those transactions were for less than $1, with more than half of those transactions being for $10 or less.
The company said in a blog post Wednesday that only 8.5% of the new 1099-DA forms met $600, the threshold that triggers reporting of non-employee compensation, and 74% were less than $50.
Each form is also sent to the client and a reconciliation task is created for the taxpayer who receives the form. The bottom line is that standard tax software does not handle crypto transactions. Kraken estimates that on top of standard filing costs, active cryptocurrency holders bear an additional burden of $250 to $500 per year for specialized tax software.
“The cost to taxpayers of the time they spend reconciling these microtransactions, often with incomplete data, is highly disproportionate to any revenue the IRS collects from these transactions,” Clarken said.
The exchange said the Tax Foundation estimates that filing individual tax returns has cost Americans a total of $146 billion in time and expense, while the National Taxpayers Alliance Foundation estimates the average time for non-business filers is about 13 hours and costs $290 per return.
The total proceeds provided by brokers in the 2025 report do not include a cost basis, meaning the table shows what was sold but not what was purchased for. Kraken said it answered thousands of customer questions about the tables, but the tables reflected only one side of the calculation.
two questions
Kraken points to two parts of the tax code that cause problems. One is the lack of a minimumor low-level cryptocurrency payment exemptions, meaning even small cryptocurrency purchases can trigger a taxable event that needs to be reported.
“Imagine you walked into a Steak ‘n Shake restaurant and paid for your $7.99 meal in Bitcoin via a payment app. You have triggered a taxable event,” Kraken wrote as an example. “Technically, you need to find the cost basis of the specific Bitcoin you spent, calculate whether you made a gain or loss on that portion of Bitcoin, and report it on Form 8949.”
The same argument was recently made by the libertarian think tank Cato Institute. The institute said that using BTC to buy a cup of coffee every day “could result in more than 100 pages of tax filings.”
The second issue is staking. Rewards earned by staking assets are treated as ordinary income when received based on the market price of the token on that day. Most holders keep these tokens rather than sell them, meaning they owe taxes on the tokens they haven’t sold yet.
If the token price drops between receipt and submission, the tax may exceed the asset’s current value. Kraken calls this revenue phantom revenue and says a significant portion of its sub-1099-DA issuance goes toward staking distribution.
Legislation before Congress includes minimum regulations, but only for stablecoins. Kraken is pushing for broader inflation index exemptions, with anti-abuse guardrails to prevent structuring.
The exchange also asked Congress to let taxpayers choose when staking rewards are taxed, whether received under current rules or sold when a gain or loss is realized.
Kraken said its systems and those of other exchanges already support both reporting methods, but the option requires authorization.