Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. The U.S. tax code for digital assets is overly burdensome and needs fixing, according to leading cryptocurrency exchange Kraken. "It's time to fix digital asset taxes," Kraken said in a Wednesday post, announcing that it issued 56 million tax forms to the IRS, with a third for transactions worth less than $1 and 53.4% for $10 or less. Only 8.5% were above $600, which is the transaction threshold that traditionally triggers a taxable event, Kraken said. Meanwhile, 74.3% were $50 or less.
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• Traders Are Flocking to Direxion ETFs — Targeting Tesla and Elon Musk's Market Moves "The hours taxpayers spend reconciling these micro-transactions, often with incomplete data, generate costs wildly disproportionate to any revenue the IRS will collect from them," Kraken said. Kraken said cryptocurrency users needed dedicated tax software, which could cost between $49 and $599 a year. This comes in addition to the between $128 to $300 the IRS estimates taxpayers spend to file their traditional returns, the exchange said. The burden on cryptocurrency users in the 2025 tax year is compounded by the fact that newly issued 1099-DA forms do not include cost basis data, leaving users to reconcile it, Kraken said. Kraken said lawmakers should implement a de minimis exemption to exclude small transactions from cryptocurrency capital gains reporting. Trending: See What AI Could Build for Your Portfolio — Try a Custom Index Now Lawmakers are already working on one such bill, but the de minimis rule is limited to stablecoins. Kraken said the provision should be expanded to include Bitcoin, claiming that it is "the most widely held digital asset in America." Kraken also said that cryptocurrency users should be allowed to decide when to pay taxes on their staking rewards. Currently, users are taxed at the point of receipt. The firm said this could see users, most of whom decide to restake, pay more than their tokens could be worth in the long run. Kraken’s remarks come after cryptocurrency tax software provider Summ warned earlier this month that cryptocurrency users could overpay their taxes for the 2025 tax year by $14,500 amid confusion with the 1099-DA. As digital assets become more integrated into everyday investing, the complexity around reporting and taxes is becoming harder for individuals to manage on their own—especially as rules continue to evolve. For those navigating that uncertainty, some investors choose to speak with a financial professional. Services like AdviserMatch connect users with financial advisors who can help them think through how different assets fit into their broader financial picture, including potential tax considerations and reporting challenges.