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Crypto exchange Kraken reported that it has filed more than 56 million Form 1099-DAs with the US tax authorities for the 2025 tax year. One number stood out among all those hefty transactions, which highlights that the system may be fundamentally out of sync with how crypto is actually used.
According to the company, 18.5 million forms were tied to transactions worth less than $1. Meanwhile, more than half of the transactions were for $10 or less. It added that roughly three out of every four filings were under $50. There were only 8.5% of transactions that exceeded $600. This is seen as a threshold that typically triggers reporting in other parts of the tax system.
This suggests that millions of filings were generated from activity as small as fractional staking rewards or everyday payments.
Why is every Crypto transaction taxed?
Kraken says this is not an edge case, and it’s how the current rules are designed to work. Digital assets are treated as property under existing guidance. This directly conveys that every transaction, no matter how small, can trigger a taxable event.
This covers buying something as simple as a coffee with Bitcoin or receiving tiny staking rewards. It all requires tracking cost basis, calculating gains or losses, and reporting them. Exchanges are required to file the paperwork regardless of the size.
“This year, we issued over 56 million Form 1099-DAs, one for every reportable transaction our customers made in 2025,” the company said. It added that most of these were tied to routine activity rather than large trades. However, the result is a compliance burden that appears disproportionate to the value being reported.
Many of these forms don’t even include full cost-basis information. This means that the users are left to reconcile the data themselves. Kraken noted that it received thousands of customer inquiries from users trying to understand the new forms and how to report them correctly.
This is makes ZERO sense.
Kraken filed 56 million crypto tax forms with the IRS for 2025.
More than 30M of them were for transactions under $10.
I.e. more than half the forms Kraken submitted to the federal government covered trades that netted less than a large Big Mac meal.… pic.twitter.com/fmRJrzYwNF
— Milk Road (@MilkRoad) April 22, 2026
For taxpayers, the friction is adding up quickly. The report mentioned that the Standard tax software often doesn’t fully support crypto reporting. It is pushing users toward specialized tools that can cost anywhere from $49 to $599 annually. This, combined with filing costs and time spent reconciling transactions across wallets and exchanges, may cause active users to spend hundreds of dollars just to stay compliant.
This comes on top of an already complex tax system. Estimates suggest the average US filer spends hours and hundreds of dollars each year on tax preparation. That is even without crypto. Kraken sees this issue in policy design, and not as blockchain complexity.
Will Crypto get a tax break?
The exchange seems to be pushing for a “de minimis” exemption. This would remove reporting requirements for small transactions below a certain threshold. It is often proposed between $200 and $600. Such exemptions already exist in other areas of the tax code.
“The vast majority of the forms are for staking rewards measured in fractions of a cent, small purchases, and routine activity,” Kraken said. “Every single one generates a form that a real person is now expected to understand, reconcile, and report.”
Some lawmakers have begun discussing reforms, but no clear framework has been implemented yet. For now, the system remains unchanged, where millions of micro-transactions translate into millions of tax forms, and even the smallest crypto activity carries a reporting trail.
This comes in when Kraken’s parent company, Payward Inc moved ahead to file for a US initial public offering. The initial draft S-1 registration was submitted in November 2025. Its valuation reportedly stood around $13.3 billion as of April 2026. This is a decline from a peak valuation of $20 billion in November 2025.
The crypto market is looking fresh, while adding gains. Bitcoin price is up by more than 4% over the last 7 days. BTC is trading at an average price of $78,250 at the press time.
If you want a calmer entry point into DeFi crypto without the usual hype, start with this free video.
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