In the 2025 tax year, cryptocurrency exchange Kraken filed 56 million forms with the U.S. Internal Revenue Service (IRS) related to crypto transactions.
Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less. Notably, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, while 74% were for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer.
Furthermore, standard tax software does not support crypto transactions, leading Kraken to estimate an additional annual burden of $250-$500 for active crypto holders. The exchange emphasizes that the time spent reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionately high compared to the revenue the IRS will collect. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation reports an average time of about 13 hours and $290 per return for non-business filers. Kraken identifies two key issues with the tax code: the lack of a de minimis exemption for crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt.
The exchange argues that even small crypto purchases can trigger a taxable event, and rewards earned on staked assets are taxed immediately, regardless of whether they are sold. Kraken is advocating for a broader inflation-indexed exemption and the option to tax staking rewards at sale, rather than at receipt.