Digital asset exchange kraken It announced that it has filed more than 56 million Form 1099-DA tax documents with the IRS for the 2025 tax year. The vast majority of these filings—about one-third for transactions under $1, more than half for transactions of $10 or less, and three-quarters for transactions under $50—underscore how the current tax code burdens ordinary users rather than high-volume transactions. traders.
According to Kraken, the real challenge lies not in reporting technology but in outdated regulations that address even the smallest issues. crypto- activities are taxable events.
Financial and time costs are significant. WE According to Tax Foundation estimates, taxpayers currently spend a total of $146 billion annually; the average individual allocates about eight hours and $128 to $300 per return, according to tax foundation estimates.
For the more than 55 million American adults who own digital assets, the burden is even greater.
Standard tax software rarely accommodates crypto, forcing users to invest in specialized tools that cost between $49 and $599 annually.
Active owners typically face an additional $250 to $500 in compliance expenses, as well as hours to reconcile transactions worldwide. wallets and platforms.
Kraken noted that there have been thousands of customer inquiries regarding the new 1099-DA forms, which report only gross receipts without cost basis details and allow investors to calculate gains or losses themselves.
Kraken’s internal structure data underscores inefficiency: 53.4 percent of forms cover transactions of $10 or less, while only 8.5 percent exceed $600; this is the threshold used for other payment apps like Venmo.
Many of them arise from routine actions such as fractional purchases. stretching Offering rewards or small purchases generates minimal tax revenue but creates disproportionate administrative difficulties for both users and the IRS. To address these issues, Kraken advocates two targeted reforms.
First, lawmakers should create a robust de minimis exemption for small digital asset transactions, similar to existing rules for other payments but tailored to the cryptocurrency’s volatility.
For example, using Bitcoin Purchasing a $7.99 meal currently triggers capital gains reporting, cost basis tracking, and Form 8949 filings; An impractical requirement that the United States is largely alone in imposing.
Englandby contrast, it imposes an annual capital gains deduction that protects modest trades.
Kraken recommends that any threshold be indexed to inflation with anti-abuse safeguards, and notes that pending legislation: GENIUS Act (Signed in July 2025) currently takes a more neutral approach to digital payments.
Second, the platform is calling for an end to “phantom income” taxation on staking rewards.
It cannot be sold even if it is too small under current IRS rules tokens Earnings for securing blockchains are counted as ordinary income at fair market value upon receipt.
Users who repurchase these assets may owe taxes on amounts that subsequently decrease in value.
kraken It recommends that taxpayers be given the option to defer tax until the sale when actual economic gain or loss occurs.
This change will align reporting with real-world behavior, reduce microreferences, and leverage change data more effectively. With bipartisan momentum building around tax simplification,
kraken He emphasizes that these adjustments will benefit ordinary investors across demographics without compromising revenue collection.
As the digital asset ecosystem gains more users 2026updating the tax code to reflect modern realities is no longer optional; necessary to promote broader adoption and fairness. kraken‘s data and recommendations signal a call for Congress to act before next tax season; potentially compounding or overcomplicating the frustration of millions.
