Kraken's crypto tax reporting for 2025
Bitcoin,  Cryptocurrencies,  Regulation

One-Third of the 2025 Tax Forms Kraken Filed Were Below $1

Capital gains taxes must be paid on all of them

By  / April 22, 2026 /

Cryptocurrency exchange Kraken filed 56 million crypto tax forms in 2025. Half were for amounts below $10 and three quarters below $50. One third were below a single dollar.

That’s a big problem for crypto owners when it comes to filing taxes, as each of those transactions requires them to fill out a capital gains report.

“These forms were not sent to sophisticated traders who made big returns from crypto,” Kraken said in an April 22 report. “The vast majority of the forms are for staking rewards measured in fractions of a cent, small purchases, and routine activity. Every single one generates a form that a real person is now expected to understand, reconcile, and report, or risk an IRS notice.”

The amount of work these transactions cause tax filers is excessive. The libertarian Cato Institute just noted that buying a cup of coffee each day with bitcoin can cause a crypto user to need to file 100 pages of capital gains tax forms.

This is even harder than it sounds, as the taxpayer must figure out the cost basis of each transaction. That means figuring out how much they paid for that particular piece of bitcoin, figure out its value at the time it was spent, and do the capital gains math from there.

“The process is almost tailor-made to discourage the use of alternative currencies,” said Nicholas Anthony, a research fellow at the Cato Institute.

Kraken estimates that the dedicated crypto tax filing software needed to file for these transactions costs $50 to $600 per year — on top of the regular filing software costs — for the 45-55 million Americans who now own crypto. That’s on top of many hours of calculations for active traders.

Two fixes

The first, and most important, fix is to pass a de minimis exception for crypto transactions, Kraken said. This would put a cap on how small transactions must be to be reportable.

Kraken notes that current proposed tax legislation only includes a de minimis exemption for stablecoin payments, not bitcoin or other cryptocurrencies. In January, a PayPal survey found that 40% of U.S. merchants accept bitcoin payments. That doesn’t factor in that many crypto debit cards issued by Mastercard and Visa are usable almost everywhere.

Kraken noted that current legislation before the House proposes a $200 de minimis exemption, but only for stablecoin payments.

“The tax code should be agnostic whether you are paying with cash, bitcoin, or stablecoins,” Kraken said.

The second fix would be to end so-called “phantom income” from staking.

“The IRS takes the position that each [staking] reward is treated as ordinary income at the moment of receipt, valued at fair market value on that date,” Kraken said.

But as most people do not sell staking rewards immediately, they owe taxes on unrealized gains.

“If the token price drops between receipt and filing, the taxpayer owes tax on more than the asset is currently worth,” it added.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics.