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

Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half of them being for $10 or less. The company noted that only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, and 74% were for less than $50.

Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Furthermore, standard tax software does not support cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for dedicated tax software, on top of standard filing costs, for active cryptocurrency holders. Kraken emphasized that the time spent by taxpayers on reconciling these micro-transactions often results in costs that are disproportionately high compared to the revenue the IRS will collect from them. 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 to complete their tax returns is approximately 13 hours, with an average cost of $290 per return. The lack of a de minimis exemption for cryptocurrency payments means that even small purchases can trigger a taxable event.

Kraken illustrated this point by citing an example where buying a meal with Bitcoin could result in a taxable event, requiring the individual to calculate and report the gain or loss on that specific transaction. The company also highlighted the issue of staking rewards being treated as ordinary income at the moment of receipt, which can lead to 'phantom income' if the token price falls between receipt and filing. Kraken is advocating for a broader, inflation-indexed exemption, paired with anti-abuse guardrails, as well as allowing taxpayers to choose when staking rewards are taxed, either at receipt or at sale.