In the 2025 tax year, crypto exchange Kraken filed approximately 56 million forms with the US Internal Revenue Service (IRS) for crypto transactions. Of these, around 18.5 million were for transactions valued at less than $1, and over half were for $10 or less. A mere 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting requirements for non-employee compensation, with 74% being for less than $50.
Each form is sent to the customer, resulting in a reconciliation task for the taxpayer. Standard tax software does not support crypto transactions, and Kraken estimates the additional burden on active crypto holders to be between $250 and $500 annually for dedicated tax software, excluding standard filing costs. The exchange notes that the time spent by taxpayers on reconciling micro-transactions often results in 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. Furthermore, the National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return.
For the 2025 tax year, brokers reported gross proceeds without cost basis, leading to thousands of client inquiries about forms that only captured one side of the calculation. Two key issues contribute to the problems: the lack of a de minimis exemption for crypto payments, which means even small purchases can trigger a taxable event, and the treatment of staking rewards as ordinary income upon receipt. Kraken argues that this can result in 'phantom income' and is pushing for a broader, inflation-indexed exemption, as well as the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.