Kraken Submits 56 Million Crypto Tax Forms for 2025, Highlighting Reporting Burden

In the 2025 tax year, crypto exchange Kraken filed approximately 56 million crypto transaction forms with the U.S. Internal Revenue Service.

Of these, around 18.5 million were for transactions valued at less than $1, while over half were for $10 or less. The newly introduced Form 1099-DA revealed that only 8.5% of these transactions exceeded $600, which is the threshold for reporting non-employee compensation, and a significant 74% were below $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Moreover, standard tax software does not support crypto transactions, leading to an additional burden on active crypto holders, estimated at $250-$500 annually for specialized tax software, on top of standard filing costs.

Kraken emphasized that the time spent by taxpayers on reconciling these micro-transactions, often with incomplete data, results in costs that are disproportionate to the revenue the IRS will collect. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. The National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return.

For 2025, brokers reported gross proceeds without cost basis, meaning the form only shows what was sold, not what it was bought for. Kraken received thousands of client inquiries about forms that only captured one side of the calculation. Two key issues in the tax code contribute to these problems: the lack of a minimum threshold for crypto payments, which means even small purchases can trigger a taxable event, and staking rewards, which are treated as ordinary income at the moment of receipt.

Kraken argues that this can result in 'phantom income' if the token price falls between receipt and filing. The exchange is advocating for a broader, inflation-indexed exemption, paired with anti-abuse measures, and is also pushing for taxpayers to have the option to elect when staking rewards are taxed, either at receipt or at sale.