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 pertained to transactions valued at less than $1, while over half were for $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 handle cryptocurrency transactions, with Kraken estimating an additional burden of $250-$500 per year for dedicated tax software on top of standard filing costs. The company noted that the time spent reconciling these micro-transactions often generates costs 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. The National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return. Kraken identified two issues 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 company argues that a broader inflation-indexed exemption, paired with anti-abuse guardrails, is necessary. Additionally, Kraken is advocating for taxpayers to have the option to elect when staking rewards are taxed, either at receipt or at sale.