Kraken’s 56M Crypto Tax Forms Expose IRS Reporting Chaos

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Kraken Files 56 Million 1099-DA Forms, Flags Crypto Tax Challenges

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.

Kraken, a cryptocurrency exchange, has sent over 56 million tax forms (specifically, 1099-DAs) to the IRS for the 2025 tax year. This large number shows how complicated it is to report taxes on digital currencies under current regulations.

According to the official statement, forms required for reporting crypto transactions were filed for every transaction on the platform. Most of these reports detail smaller transactions, rather than large-scale trading.

Over a third of all transactions (32.6%, or 18.5 million) were for less than a dollar. Half of all records were under $10, and nearly three-quarters (74.3%) were valued at less than $50.

Details of the findings

The information shows that most tax filings related to cryptocurrency come from common activities like earning rewards, making small payments, and everyday purchases, not from large trades. Because each of these activities creates a separate record, taxpayers need to report each one individually.

Form 1099-DA is a new tax form designed to increase transparency when trading digital assets like cryptocurrency. Kraken has pointed out that this form might be confusing for some users because it only shows the total amount earned from sales, and doesn’t include how much you originally paid for the asset. Unlike other tax documents, it doesn’t factor in your cost basis.

Following the rules and regulations also costs both time and money. One report estimates that Americans spend a total of $146 billion annually just to comply with tax laws.

For people who use cryptocurrency, staying compliant with tax laws can be complicated and time-consuming. It often requires special software to track transactions and calculate taxes, which can cost anywhere from $49 to $599 annually, on top of other tax-related expenses.

From my analysis at Kraken, it appears the cost of reporting a large volume of small transactions could actually exceed the tax revenue those transactions bring in. We’re essentially finding that the administrative burden might not be worth the financial gain.

The extortion attempt 

This news follows a recent report from Kraken that they were targeted in an extortion attempt. A group threatened to release videos showing how they gained access to Kraken’s systems and client data.

Kraken’s Chief Security Officer, Nick Percoco, explained that the recent incident stemmed from previous unauthorized access to customer data by individuals with internal access to their support systems. Importantly, Kraken confirmed there was no external system breach and customer funds remained safe.

Lack of de minimis

Another problem is that the U.S. requires reporting of all cryptocurrency transactions, no matter how small. Most other countries have a minimum amount below which reporting isn’t necessary.

These findings come as politicians discuss how to regulate cryptocurrencies and how to tax them. While several new laws have been suggested to create rules for cryptocurrencies, disagreements continue about balancing ease of use for people with the need to follow regulations.

Kraken’s recent statement highlights how difficult it is to accurately report taxes on cryptocurrency, and this could influence upcoming discussions about crypto regulations.

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2026-04-22 22:51