Kraken Reports Massive Tax Filing Volume, Citing Inefficient IRS Reporting Rules

Kraken has submitted 56 million crypto-transaction forms to the U.S. Internal Revenue Service (IRS) for the 2025 tax year, exposing a significant gap between reporting volume and actual financial value. According to a company blog post, approximately 18.5 million of these filings covered transactions worth less than $1, while over half were for amounts of $10 or less. The data underscores the friction created by current U.S. tax codes. Only 8.5% of the newly introduced Form 1099-DAs cleared the $600 threshold that typically triggers reporting for non-employee compensation, and 74% of all forms were for transactions under $50. Kraken notes that these micro-transactions create immense reconciliation tasks for taxpayers, often requiring dedicated software costing between $250 and $500 annually. Kraken identified two primary systemic issues: the lack of a 'de minimis' exemption for small crypto payments and the taxation of staking rewards. Currently, staking rewards are treated as ordinary income at the moment of receipt. This creates 'phantom income,' where taxpayers owe taxes on assets that may lose significant value before they are ever sold. In response, the exchange is pushing Congress to adopt a broader inflation-indexed exemption for small payments and to allow taxpayers to choose whether staking rewards are taxed upon receipt or upon sale. While some legislation regarding stablecoins is moving through Congress, Kraken argues that a more comprehensive framework is necessary to prevent the tax code from hindering the practical use of digital assets.