According to Kraken, a leading cryptocurrency exchange, it has filed approximately 56 million cryptocurrency transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Notably, around 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less.
The newly introduced Form 1099-DA, which accounts for the majority of these filings, revealed that only 8.5% of the reported transactions exceeded the $600 threshold, while 74% were below $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer, and standard tax software often fails to handle cryptocurrency transactions. Consequently, Kraken estimates that active cryptocurrency holders may incur additional costs of $250-$500 annually for dedicated tax software, on top of standard filing expenses.
The company argues that the time spent reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionately high compared to the revenue the IRS will collect from them. The Tax Foundation estimates that individual tax returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation reports that non-business filers spend an average of 13 hours and $290 per return. Kraken identifies two key issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments, which can trigger taxable events for small purchases, and the treatment of staking rewards as ordinary income upon receipt.
The exchange advocates for a broader, inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale, to alleviate these issues.