Crypto exchange Kraken has filed over 56 million Form 1099-DAs with the US tax authorities for the 2025 tax year, raising concerns about the complexity of the current tax system. The majority of these transactions were worth less than $10, indicating that a significant portion of crypto activity is being reported as taxable events.
The issue lies in how digital assets are treated as property under existing guidance, triggering a taxable event for every transaction, no matter how small. This includes routine activities such as buying a coffee with Bitcoin or receiving staking rewards. Exchanges are required to file the paperwork regardless of the size, resulting in a compliance burden that may be disproportionate to the value being reported.
As a result, taxpayers are facing significant friction when it comes to reporting their crypto transactions. The Standard tax software often doesn't fully support crypto reporting, pushing users toward specialized tools that can cost anywhere from $49 to $599 annually. This, combined with filing costs and time spent reconciling transactions across wallets and exchanges, may cause active users to spend hundreds of dollars just to stay compliant.