Cryptocurrency exchange Kraken announced that it sent a total of 56 million crypto transaction forms to the US Tax Office (IRS) in the 2025 tax year. According to the statement, a significant portion of the forms cover transactions of small amounts; Approximately 18.5 million forms reported transactions worth less than $1, with more than half of the forms for transfers of $10 or less.
Tax burden increases with Form 1099-DA
According to the details shared by Kraken, only 8.5 percent of the newly commissioned Form 1099-DAs went above $600. As is known, in the USA, earnings above this level must be reported as non-employee income. On the other hand, 74 percent of 1099-DAs were $50 or less.
Submitting each reporting form to both the IRS and the customer creates serious additional tax reconciliation processes, especially for investors with heavy transaction volumes. According to Kraken’s predictions, regular crypto users may need to spend between $250 and $500 per year for additional tax software. This represents an additional cost to the basic declaration obligations.
“The hours taxpayers spend reconciling these microtransactions based on incomplete data create disproportionate costs compared to the revenue the IRS will collect,” it was quoted as saying.
Individual tax returns currently cost Americans a total of $146 billion, according to data from the U.S. Tax Foundation. The National Taxpayers Association states that the average individual return takes 13 hours to complete and carries an additional burden of $290 per head.
Price difference and incomplete cost information create problems
According to Kraken’s warning, “gross proceeds” (total sales revenue) are reported as data in the reporting made by brokers for 2025; In other words, what is sold in a transaction is reported, but the cost of purchasing the crypto asset is not shown. The exchange stated that thousands of its customers contacted them due to confusion caused by the sell-side notification alone.
Two main topics in the legal infrastructure make this picture more complex. First; No minimum amount exemption (de minimis) in crypto payments. So, every transaction made with crypto, even a small spend of $1, technically requires a declaration. According to Kraken’s example, even a $7.99 restaurant payment with Bitcoin constitutes a tax event, and the user must individually determine and declare the cost of the Bitcoin he/she has traded with.
A similar opinion was recently expressed by the Cato Institute, noting that even daily coffee shopping could produce dozens of pages of tax documents when done with BTC.
Staking income and Phantom income debate
The second controversial topic is the taxation of rewards obtained from “staking” transactions. According to current legislation, rewards earned from staked assets are considered income based on the market price of the day they are received and directly result in tax liability. Although users mostly hold these tokens without selling them, they pay taxes because they are written off as income.
If the value of the token decreases, the tax paid for the staking rewards received may even exceed the real value of the asset. Kraken stated that a significant portion of the 1099-DA forms below $1 were due to staking distributions.
A bill advancing in Congress provides for a partial exemption for small-amount stablecoin transactions; However, Kraken argues that a broader exception should be made to this practice, covering all crypto assets, indexed to inflation and containing measures against abuse. In addition, the exchange demands that the user be given the right to choose one of the “reward moment” or “sale time” options for taxing staking income. Kraken emphasizes that the technical infrastructure is ready for this choice, but legal permission is required.
