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, with over half of them being for $10 or less.
The newly introduced Form 1099-DA, which is used for reporting cryptocurrency transactions, saw only 8.5% of filings exceed the $600 threshold, 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 to an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken argues that the time spent reconciling these micro-transactions generates costs that are disproportionate to the revenue the IRS will collect.
The Tax Foundation estimates that individual tax returns already cost Americans a combined $146 billion in time and expenses. The National Taxpayers Union Foundation reports that the average time spent on non-business tax filings is around 13 hours, costing approximately $290 per return. Kraken identifies two primary 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 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.