Kraken, a cryptocurrency exchange, has filed 56 million forms for crypto transactions with the US Internal Revenue Service for the 2025 tax year. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less.
The company noted that only 8.5% of the newly introduced Form 1099-DAs exceeded $600, the threshold for reporting 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 cryptocurrency transactions, leading Kraken to estimate an additional annual burden of $250-$500 for active cryptocurrency holders. The company emphasized that the time spent reconciling these 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, while the National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return. Kraken identified two key issues with the tax code: the lack of a minimum 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 with anti-abuse safeguards is necessary, as well as the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.