Kraken, a prominent crypto exchange, has filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Notably, around 18.5 million of these forms were for transactions valued at less than $1, with over half being for $10 or less. The newly introduced Form 1099-DA revealed that only 8.5% of the transactions 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 burden of $250-$500 per year for dedicated tax software for active crypto holders.
The exchange emphasized that the time spent reconciling these micro-transactions often 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 identified 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, either at receipt or at sale.