Kraken, a leading cryptocurrency exchange, has filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for amounts of $10 or less. Only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, with 74% being 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, with Kraken estimating an additional annual burden of $250-$500 for dedicated tax software. The company notes that the time spent reconciling these micro-transactions generates costs that are disproportionate 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.
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 is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed.