Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the US Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms were for transactions valued at less than $1, with over half being for $10 or less. The company notes that only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, and 74% were for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer.
The exchange estimates that the additional burden on an active cryptocurrency holder is between $250 and $500 per year for dedicated tax software, on top of standard filing costs. Kraken argues that the time spent reconciling these micro-transactions generates costs that are disproportionate to the revenue the IRS will collect from them. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. The National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return.
Kraken identifies two problems with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange suggests that a broader inflation-indexed exemption, paired with anti-abuse guardrails, is necessary. Additionally, Kraken proposes that taxpayers should be allowed to choose when staking rewards are taxed, either at receipt or at sale, when a gain or loss is realized.