Key Highlights
- Kraken filed over 56 million Forms 1099-DAs for the year 2025.
- About 32.6% of forms were for transactions less than $1, whereas 74.3% were under $50.
- The filings mainly arise from staking payouts, micropayments, and crypto exchanges.
Crypto exchange Kraken reported its submitted over 56 million Form 1099-DAs to the Internal Revenue Service (IRS) for the 2025 fiscal year, highlighting the complexity of digital asset reporting under existing laws.
As per the official announcement, the forms, which are necessary for the registration of crypto transactions, were submitted for each transaction made through the platform. The majority of these reports refer to small transactions instead of high-volume trading.
Around 32.6% of the transactions, or 18.5 million, had values lower than one dollar. Half of the total number of documents was below $10. 74.3% were registered with values lower than $50.
Details of the findings
The data suggests that most filings result from everyday crypto usage, such as staking rewards, micropayments, and small purchases, rather than high-value trading. Each transaction generates a separate form, and taxpayers are required to report them individually.
Form 1099-DA is a part of a greater regulation aimed at transparency in dealing with digital assets. However, Kraken noted that this kind of reporting may lead to some confusion among users. Different from usual reporting documents, Form 1099-DA deals only with gross proceeds and does not include cost basis.
Compliance is also associated with the need for time and financial outlays. The report states that industry figures indicate that American citizens have to pay $146 billion every year for tax compliance.
In the case of crypto users, compliance takes more time and usually requires special software that will record all the activities and make calculations. Software of that kind might cost up to $49-$599 a year, besides all other expenses associated with taxes.
Kraken’s analysis suggests that the effort required to report numerous small transactions may outweigh the tax revenue generated from them.
The extortion attempt
The development comes just a week after Kraken reported an extortion attempt by a group that threatened to reveal videos containing information about access to their systems as well as client information.
According to Chief Security Officer Nick Percoco, the incident was linked to earlier events involving insiders who accessed client data through support systems. Kraken said there was no system breach and that no customer funds were affected.
Lack of de minimis
A related issue concerns the lack of a de minimis threshold for small crypto transactions. Unlike other nations, the U.S. mandates the filing of reports even when small amounts are involved in crypto transactions.
These revelations occur as lawmakers deliberate on the proper regulations to apply to cryptocurrencies and their tax treatments. Although new bills have been proposed to create a regulatory structure for cryptocurrencies, debates persist concerning how to harmonize user convenience with regulatory compliance.
The announcement by Kraken sheds light on the complexities inherent in executing crypto tax reporting and could inform future talks on crypto regulations.
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