Kraken, a cryptocurrency exchange, has filed 56 million forms for crypto transactions 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, while over half were for $10 or less. The company noted that only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold that triggers reporting for non-employee compensation, with 74% being 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 Kraken to estimate an additional annual burden of $250-$500 for active crypto holders. The company emphasized 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. Kraken identified two key 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 company is advocating for a broader, inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.