Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Approximately 18.5 million of these forms were for transactions valued at less than $1, with over half of them being for $10 or less. The newly introduced Form 1099-DA, which accounts for 8.5% of the total, exceeds the $600 threshold that triggers reporting for non-employee compensation. Meanwhile, 74% of the forms 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, often with incomplete data, generates costs that are disproportionately high compared 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.
The National Taxpayers Union Foundation reports that the average time spent on non-business filers is 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 is advocating for a broader inflation-indexed exemption and the option to elect when staking rewards are taxed, either at receipt or at sale.