Kraken says it filed more than 56 million Form 1099-DA submissions tied to customer activity in the 2025 tax year, a figure the exchange is using to argue that the first year of digital-asset broker reporting has created a compliance machine dominated by low-value transactions rather than economically significant disposals. In Kraken’s telling, the burden is not primarily the existence of reporting itself, but the mismatch between the granularity of the filing obligation and the practical tax value of what is being reported.
That mismatch becomes clearer in the distribution of the forms. Kraken’s own breakdown shows the reporting load is concentrated in the smallest transaction bands, with about 18.5 million forms tied to transactions under $1, 53.4% tied to transactions of $10 or less, 74.3% tied to transactions under $50, and only 8.5% exceeding $600. The exchange argues those proportions show that most of the reporting volume is being generated by routine activity and micro-flows rather than by large realized gains.
Gross proceeds reporting is turning tax compliance into a reconciliation problem
The operational strain comes from the design of the form itself. For 2025 transactions, Form 1099-DA requires brokers to report gross proceeds, but not basis information, under IRS instructions that phase in fuller reporting later. That means taxpayers receiving the form still need to reconstruct gain or loss from separate acquisition records, wallet histories and transfer data, especially when assets moved across platforms before disposition.
Kraken has leaned hard into that point in both its policy campaign and customer guidance. The exchange says gross-only reporting pushes a large amount of work back onto users and custodial platforms, because gross proceeds do not represent taxable gain or loss and may be unusable on their own for return preparation. Kraken’s support materials tell clients that if they transferred digital assets in from another venue or wallet, the platform may not have complete acquisition data and additional records may be needed to calculate basis correctly.
That is where the issue moves from retail annoyance to a broader infrastructure problem. For tax teams, treasuries and active traders, gross-only reporting creates more reconciliation points across venues, wallets and internal ledgers, increasing the need for software, record provenance and exception handling. Kraken says a typical active holder can spend roughly $250 to $500 a year just to stay compliant, before counting the time required to reconcile activity across exchanges and wallets. The number is Kraken’s estimate, but it underscores the real commercial consequence of the current regime: more budget has to shift into tax tooling and audit readiness.
The policy fight is shifting toward thresholds, timing and data quality
Kraken is using the first year of filings to press for legislative relief. Its main ask is a true de minimis exemption for small digital-asset payments, rather than a narrow carveout that would leave most crypto transactions subject to the same reporting burden. In its April 22 policy post, Kraken argued that current proposals with de minimis treatment for payment stablecoins do not solve the problem for bitcoin and other widely used digital assets, and said any meaningful threshold should be inflation-indexed and paired with anti-abuse guardrails.
The company is also pushing for broader flexibility on the timing of taxation for staking rewards. Kraken argues that current treatment can create “phantom income” on rewards that are received but not sold, and says Congress should let taxpayers choose whether those rewards are taxed at receipt or at sale. That part of the debate matters because the IRS has already delayed some broker reporting obligations for staking and certain other transaction types pending further guidance, showing that the reporting framework is still being adjusted around edge cases.
There is also a more immediate execution issue beneath the policy argument. Kraken has acknowledged technical challenges and delays in generating 2025 tax forms, while telling clients that the Tax Center and third-party tools may be needed to supplement what appears on Form 1099-DA. That does not change the legal reporting obligation, but it highlights how the first year of the regime is forcing exchanges to scale data-engineering, client support and record-matching systems at the same time.
The larger takeaway is that crypto tax reporting in the United States has entered a new phase where operational friction, not just tax liability, is becoming a market-structure issue. Until Congress creates a statutory de minimis rule or the IRS adjusts the reporting framework, platforms will keep spending to improve basis tracking and statement quality, while investors and institutions absorb the cost of stitching together tax records that the gross-proceeds form does not yet fully solve. Even then, the relief will be partial: IRS instructions already make clear that basis reporting becomes mandatory for certain covered digital-asset transactions beginning in 2026, which means the system is evolving, but not necessarily getting simpler overnight.