Kraken, a cryptocurrency exchange, has filed 56 million forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1 and over half for $10 or less. Only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, while 74% were for less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer.
The lack of standard tax software to handle cryptocurrency transactions adds to the burden, with estimated additional costs of $250-$500 per year for active cryptocurrency holders. The Tax Foundation estimates that individual returns already cost Americans $146 billion in time and expenses, with the average time for non-business filers being around 13 hours and $290 per return. The main issues stem from the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
Kraken argues that a broader inflation-indexed exemption, paired with anti-abuse guardrails, is necessary to alleviate the reporting burden. The company also suggests allowing taxpayers to choose when staking rewards are taxed, either at receipt or at sale, to provide more flexibility.