Kraken says it sent 56M 1099-DA forms to IRS, urges crypto tax de minimis rule
The exchange says millions of forms tied to sub-$1 activity show the reporting regime is capturing micro-transactions.
Kraken says US crypto tax reporting for 2025 generated more than 56 million 1099-DA forms sent to the IRS, with a large share tied to tiny transactions. The exchange is pushing Congress for a de minimis exemption for small payments and a rewrite of staking taxation it calls “phantom income.”
Key Takeaways
- Kraken said it issued more than 56 million 1099-DA tax forms to the IRS for 2025 digital-asset reporting.
- A large share of the forms were tied to micro-activity, including about 18.5 million for transactions under $1 and roughly 28 million for $10 or less.
- The exchange is urging Congress to exempt “small, routine digital asset payments from capital gains reporting” to “eliminate millions of unnecessary forms.”
- Kraken also wants staking taxes changed to avoid situations where users “owe taxes on value they have not realized” without selling rewards.
56 Million 1099-DAs: Kraken’s 2025 Reporting Breakdown
Kraken said it sent more than 56 million 1099-DA forms to the US Internal Revenue Service for 2025 reporting requirements. The exchange framed the number as evidence that the current regime is sweeping in routine, low-value activity rather than just meaningful taxable events.
The breakdown Kraken provided is the point. About 18.5 million forms were tied to transactions under $1, around 28 million were for $10 or less, and 75% of the total were under $50.
For traders, that distribution matters more than the headline total. It suggests the reporting pipeline is capturing a long tail of micro-transactions that can be operationally expensive to track, reconcile, and explain, even when the economic value is trivial.
Two Tax Changes Kraken Wants: De Minimis for Payments and a Staking Income Rewrite
Kraken’s first ask is a de minimis exemption, a rule that would exclude very small digital-asset payments from capital gains reporting. The exchange’s proposed target is explicit: exempt “small, routine digital asset payments from capital gains reporting” and “eliminate millions of unnecessary forms.”
The second ask is separate and framed as a realization problem. Kraken argued for ending taxation of “phantom” staking income, describing cases where holders “owe taxes on value they have not realized” because they have not sold staking rewards.
Kraken positioned the push as taxpayer-focused rather than industry rent-seeking. “This is not about helping crypto companies,” the company said. “It is about 55 million Americans, spanning every state, age bracket and industry, who are navigating a tax system designed before digital assets existed. Congress should act to make taxpayers’ lives easier.”
Where Congress Is (and Isn’t): The $200 Stablecoin Draft-Bill Reference
Kraken’s data drop lands in a policy environment that has flirted with de minimis ideas without committing to a broad carve-out. Proposals have circulated for cryptocurrencies like Bitcoin, but the most recent draft referenced in Kraken’s post suggested a narrower approach: only stablecoin transactions under $200 would trigger reporting to the IRS.
That detail cuts both ways. It signals lawmakers may be exploring thresholds, but it also hints any relief could be scoped tightly, potentially limited to stablecoins rather than a blanket rule for all digital-asset payments.
The broader compliance backdrop is already politically charged. A Fortune report citing Tax Foundation data estimated individual returns cost US taxpayers $146 billion in time and out-of-pocket expenses. The Trump administration also ended the IRS free Direct File program in November 2025, removing a no-cost filing option for eligible taxpayers.
Signals Traders Should Track if a De Minimis Rule Is Getting Real
The first real tell is introduced bill text that defines a de minimis threshold for digital-asset payments, including whether it applies broadly or only to stablecoins. The $200 stablecoin draft reference sets a baseline for how narrow the first pass could be.
Second, traders should watch for IRS guidance on 1099-DA implementation details, especially anything clarifying whether micro-transactions are aggregated or reported as standalone line items. Kraken’s sub-$1 and sub-$10 counts put a spotlight on that mechanical question.
Third, staking taxation is likely to move on a different track. Any legislative language that changes when staking rewards become taxable, on receipt versus on sale, would be the cleanest signal that the “phantom income” argument is gaining traction.
Finally, Kraken’s own corporate timeline could shape how loudly it keeps pushing. The exchange filed for a confidential IPO with the SEC in November 2025, and co-CEO Arjun Sethi said in April the company would likely go public soon, though prior reports suggested the plan may have been paused amid volatile market conditions.
Compliance Friction Is Now a Market Narrative, Not Just a Tax Problem
Kraken’s numbers read like a stress test of the current reporting design. When tens of millions of forms are tied to sub-$50 activity, the political case for a payments-focused de minimis carve-out gets stronger because the waste is easy to quantify and easy to message.
I treat the staking “phantom income” push as a separate fight. It is not about paperwork volume, it is about timing and liquidity, and the threshold that matters is whether lawmakers are willing to move staking toward taxation on sale rather than on receipt.
If Congress converges on a narrow stablecoin-only threshold, this looks more like a sentiment catalyst than a fundamental shift. If a broad digital-asset de minimis rule and a realization-based staking standard both start showing up in actual bill text, the setup starts to look structural rather than narrative-driven, because it would directly reduce compliance drag for high-frequency users and stakers.
