Crypto exchange Kraken says it filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Roughly 18.5 million of them covered transactions worth less than $1, and over half were for $10 or less.

Only 8.5% of the newly introduced Form 1099-DAs cleared $600, the threshold that triggers reporting for non-employee compensation, and 74% were for less than $50, the company said in a Wednesday blog post.

Each form is also sent to the customer and creates a reconciliation task for the taxpayer who receives it. On top of that, standard tax software does not handle crypto transactions. Kraken estimated the additional burden on an active crypto holder at $250-$500 a year for dedicated tax software, on top of standard filing costs.

“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.

The Tax Foundation estimates individual returns already cost Americans a combined $146 billion in time and expenses, the exchange said, and the National Taxpayers Union Foundation puts the average time for non-business filers at about 13 hours and $290 per return.

Brokers reporting for 2025 provide gross proceeds without cost basis, meaning the form shows what was sold, but not what it was bought for. Kraken said it fielded thousands of client questions about forms that captured only one side of the calculation.

Two problems

Kraken pointed to two parts of the tax code that cause problems. One is the lack of a de minimis, or low-level, exemption for crypto payments, which means even small purchases with crypto can trigger a taxable event that needs to be declared.

“Imagine you walk into a Steak ’n Shake and pay for a $7.99 meal with Bitcoin through a payment app. You have triggered a taxable event,” Kraken wrote as an example. “You are technically required to look up the cost basis of the specific Bitcoin you spent, calculate whether you had a gain or loss on that fraction of a coin, and report it on Form 8949.”

That’s the same argument libertarian think tank Cato Institute recently made. According to the institute, buying a cup of coffee every day with BTC “can result in over 100 pages of tax filings.”

The second issue is staking. Rewards earned on staked assets are treated as ordinary income at the moment of receipt, based on the token’s market price that day. Most holders keep those tokens instead of selling them, meaning they owe tax on tokens that haven’t been sold.

If the token price falls between receipt and filing, the tax can exceed the asset’s current value. Kraken calls this phantom income and says a large share of the sub-dollar 1099-DAs it issued were staking distributions.

Legislation moving through Congress includes a de minimis provision, but is limited to stablecoins. Kraken is pushing for a broader inflation-indexed exemption, paired with anti-abuse guardrails to prevent structuring.

The exchange is also asking Congress to let taxpayers elect when staking rewards are taxed, either at receipt under current rules or at sale, when a gain or loss is realized.

Kraken says its systems and those of other exchanges already support both reporting methods, but the choice needs to be authorized.

Key takeaways

• Bitcoin price rallies higher, trading above $78,000 on Wednesday after surging nearly 6% so far this week.
• US-listed spot ETF recorded a mild inflow of $11.84 million on Tuesday amid uncertainty over US-Iran peace talks.

Bitcoin (BTC) extended its gains on Wednesday, trading above $78,000 after a significant 6% surge this week. BTC showed relatively muted institutional demand on Tuesday, with Bitcoin spot Exchange Traded Funds (ETFs) adding $11 million in inflows.

Bitcoin’s price was buoyed by both geopolitical developments and the US Treasury’s buyback plan, which could inject additional liquidity into markets and further support Bitcoin’s price momentum.

Ceasefire extension pushes BTC’s price higher

Bitcoin’s positive momentum was fueled by the extension of the two-week ceasefire announced by US President Donald Trump late Tuesday. The ceasefire, which was set to expire on April 22, was extended upon Pakistan’s request until Washington receives a unified proposal from Tehran. 

While Trump emphasized that the US blockade of Iranian seaports would remain in place, the ceasefire extension triggered a broad risk rally, driving Bitcoin to its highest price since February 3, reaching $78,452.

Market liquidity is expected to receive a significant boost this week, as the US Treasury is poised to buy back $15 billion of its own debt—matching the largest buyback in history. This move could provide fresh liquidity to the markets, creating favorable conditions for Bitcoin. As a liquidity-driven asset, Bitcoin could benefit from the influx of excess capital, which often flows into risk assets and alternative stores of value.

However, Bitcoin spot ETFs recorded a modest inflow of $11.84 million on Tuesday, down from $238.37 million the day before.
This cautious approach reflects investor uncertainty surrounding the ongoing US-Iran peace talks. However, if ETF inflows continue to increase, Bitcoin could see further upside potential.

Bitcoin price outlook: Bullish bias remains

The BTC/USD 4-hour chart remains bullish in the near term as Bitcoin is trading above both the 50-day and 100-day Exponential Moving Averages (EMAs) at $72,345 and $75,368, respectively.

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain constructive, suggesting that buyers are in control.

Resistance levels lie at the 50% Fibonacci retracement near $78,962, followed by the psychological $80,000 level and the 200-day EMA at $82,769. 

On the downside, initial support is expected around the prior channel top at $75,680, with further protection from the 100-day EMA at $75,368 and the 38.2% Fibonacci level at $74,487. The 50-day EMA at $72,345 and the lower channel boundary near $62,950 provide deeper support.

UK regulator FCA raided eight London sites over alleged illegal P2P crypto trading, issuing stop notices and escalating its wider crackdown on unregistered platforms.

According to Reuters, the UK’s Financial Conduct Authority (FCA) has raided eight locations across London suspected of running illegal peer-to-peer cryptocurrency trading operations, in a coordinated sweep conducted on April 22 with tax authorities and the Metropolitan Police.

Stop notices were issued at every site, effectively ordering the alleged operators to cease all unregistered cryptoasset activity while multiple criminal investigations into potential anti-money laundering (AML) and counter-terrorist financing breaches continue.

In a statement, the FCA said the raids were part of “ongoing criminal investigations under the Money Laundering Regulations 2017 and counter-terrorist financing legislation,” underscoring that cryptoasset exchange providers must be registered to operate legally in the UK.

Notably, there are currently zero registered peer-to-peer crypto trading businesses with the FCA, meaning any P2P platform offering UK-facing services is doing so without formal authorization.

The latest action builds on previous FCA operations that have targeted unregistered crypto ATMs and unlicensed exchanges, including raids that disrupted at least 26 illegal crypto machines across the country.
In 2024, the regulator and Metropolitan Police arrested two individuals in London suspected of running an unlicensed cryptoasset exchange that allegedly processed more than $1.25 billion worth of unregistered crypto over several years, according to the FCA and Sky News.

Therese Chambers, the FCA’s Executive Director of Enforcement and Market Oversight, has warned that “crypto businesses operating without registration are illegal” and pledged that the watchdog “will do everything in our power to stop crypto firms from operating illegally in the UK.”

The FCA has also rejected roughly 90% of crypto firms seeking registration in recent years due to AML and fraud-prevention failures, approving only a small fraction of applicants under its tightened regime.

The London raids come as UK authorities step up enforcement against crypto platforms that either ignore registration rules or promote services illegally to local investors, including recent court actions over unlawful financial promotions.

With the FCA warning consumers they should be prepared to lose all their money in crypto and emphasizing that unregistered P2P trading offers no regulatory protection, the message to UK-facing platforms is increasingly blunt: register, or risk being shut down.

Laundering of the proceeds from Saturday’s $290 million rsETH hack is well and truly underway, and state-sponsored North Korean hacking collective Lazarus Group is suspected to be behind the theft, given the commingling of funds with other TraderTraitor-related hacks, BTC Turk and ByBit.

As with previous incidents, the culprits have taken to funneling vast volumes through blockchain bridges. The tools used so far even include LayerZero, the bridging protocol from which the $290 million rsETH were originally stolen.

Read more: DeFi sector in $14B meltdown as $290M rsETH hack fallout burns Aave

The efforts began shortly after Arbitrum’s Security Council rescued over 30,000 ether (ETH), slashing the hackers’ realized profit from $245 million to around $175 million.

One on-chain analyst, who goes by “Specter,” claims to have tracked over 1,600 transactions via 370 addresses in the first 12 hours of laundering. That’s an average of one transaction every 25 seconds.

As of Wednesday morning, they tallied $116 million as having been laundered to bitcoin (BTC), with another wallet currently holding $61 million still to go.

Read more: DeFi plays the blame game

Mixed reactions

The projects behind the bridges themselves have responded differently to the ill-gotten gains flowing through their tech.

Privacy protocol Umbra acknowledged that $800,000 worth of ETH had passed through its system. While the project underlined its inability to stop illicit use of its autonomous smart contracts, it did put its own hosted front end into “maintenance mode.”

THORChain, as usual, washed its hands of responsibility, with varying degrees of diplomacy.

Read more: Vultisig founder says DPRK-linked Bybit transactions are ‘legitimate’

Specter estimates that 99% of the laundered funds flowed through THORChain, whose dashboard shows over $100,000 of affiliate fees earned on Tuesday.

While THORChain’s bridging infrastructure is decentralized across a network of 95 active nodes, affiliate fees come from use of its front end. Blockchain investigator Tanuki42 puts the recent fees at more than double year-to-date revenue.

In attempting to defend THORChain’s inability to prevent illicit use, founder JP let slip that the protocol held an admin key for many years.

Read more: DeFi karma: Garden hacked for $11M after bridging Lazarus’ loot

No let up 

The DeFi sector has faced two catastrophic hacks so far this month, with combined losses of well over half a billion dollars.

On top of this, a slew of smaller incidents also continue to batter community morale.

While DeFi users and developers alike are still reeling from the fallout of Saturday’s incident, just last night a further $3.5 million was lost.

Read more: Inside the $280M Drift hack: weeks of setup, minutes to drain

Since the hack, Volo has provided two separate updates, informing users it had recovered $500,000, and then 19.6 BTC ($1.3 million).

As if near constant multi-million dollar hacks weren’t enough to worry about, ongoing phishing campaigns continue to hook victims.

In a span of just 11 hours, four victims reportedly lost almost $600,000 to the same drainer contract.

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.

Solana price has rebounded by 6% since its Monday drop as investor confidence returns to the market. It is in the process of forming a double bottom pattern, which could position it for a significant trend reversal in the coming sessions.

According to data from crypto.news, Solana (SOL) price rose 3% to $88.5 on Wednesday, bringing its market cap to over $50 billion. Its gains came amid its daily trading volume rising by 22% to $4.96 billion.

Solana price rose after U.S. President Donald Trump announced an extension of the Iran ceasefire, easing broader macro fears and leading to a relief rally across the entire crypto sector.

The token has also benefited from institutional players doubling down on the token. Notably, Goldman Sachs recently disclosed that it holds $108 million in spot Solana ETFs. At the same time, assets in Solana spot ETFs, including those from Bitwise and Fidelity, have now surpassed $1 billion.

Solana is now in the process of completing a double bottom pattern on the daily, a setup that typically signals a bullish reversal on breakout from the neckline of the pattern. For Solana price, the neckline stands at $97.8, just 10% above the current price.

A decisive breakout could position the token for an upside to $118 with no more major resistance levels on the way. The target is calculated by adding the height of the double bottom formed to the point at which the breakout occurs.

Meanwhile, the Solana weekly liquidation heat map shows a large cluster of dense liquidity at $91, where more than $20.5 million in short positions are currently sitting. If the price reaches this level, it could trigger a short squeeze that accelerates the move toward the neckline.

Coinbase’s chief legal officer, Paul Grewal, said Wednesday that the company had removed New York Attorney General Letitia James’ prediction markets lawsuit from state court to federal court, arguing that the case turns on disputed questions of federal law over how event contracts are regulated.

The move escalates a legal fight that could help define whether prediction markets fall under federal commodities regulation and the scope of the US Commodities and Futures Trading Commission’s (CFTC) or state gambling laws, with broader implications for the oversight of platforms like Coinbase and Gemini.

“We have removed this action to federal court,” wrote Grewal in a Wednesday X post, adding that New York’s claims raise “disputed and substantial questions of federal law” and are subject to “complete preemption.”

It comes in response to a Tuesday lawsuit filed by New York’s Attorney General Letitia James against Coinbase Financial Markets and Gemini Titan, alleging their prediction market offerings violate New York gambling law by allowing users to bet on sports, entertainment and elections without a state gaming license, including users between 18 and 20 years old.

Related: Kalshi, Polymarket face trading halt in Nevada after court rulings

The lawsuit seeks fines, forfeiture of alleged illegal profits and restitution for customers, while also asking the court to stop the companies from offering similar products in New York without complying with state law.

Cointelegraph has approached Coinbase for comment on the matter and a copy of the court filing.

State regulators battle for prediction markets jurisdiction

State regulators have stepped up pressure on prediction market platforms in recent months, with 11 states having pursued legal action against them, seeking to assert control over federal regulators.

Coinbase’s Grewal said in a Tuesday X post that prediction markets are “federally regulated national exchanges” under the CFTC and the company will continue to “fight for the federal oversight of these markets that Congress intended.”

Coinbase launched prediction markets across 50 US states, including New York, on Jan. 28, offering trades on “any real-world outcomes” across sports, politics, culture and more.

The New York Attorney General’s lawsuit is the latest sign that state regulators are seeking to assert their jurisdiction over emerging prediction markets, contradicting the CFTC’s stance, which said it has exclusive jurisdiction over prediction markets registered as designated contract markets, such as Polymarket and Kalshi. 

On April 2, the CFTC filed three separate lawsuits against the gaming regulators of Illinois, Connecticut and Arizona, arguing that those states could not apply their gambling laws and licensing requirements to event contracts listed on CFTC-regulated platforms.

On April 8, the CFTC and US Department of Justice (DoJ) asked a federal court to block Arizona from enforcing state gambling law against Kalshi’s event contracts, arguing that they fall under the CFTC’s exclusive authority.

Magazine: Will the CLARITY Act be good — or bad — for DeFi?