Kraken, a cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1. Over half of the forms were for transactions worth $10 or less. The exchange noted that only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for 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 crypto transactions, and Kraken estimates that active crypto holders may incur an additional $250-$500 per year for dedicated tax software, on top of standard filing costs. The exchange 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 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 identifies two issues with the tax code: the lack of a de minimis exemption for crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange suggests that a broader inflation-indexed exemption, paired with anti-abuse guardrails, could alleviate the reporting burden.
Additionally, Kraken proposes allowing taxpayers to elect when staking rewards are taxed, either at receipt or at sale, when a gain or loss is realized.