Kraken, a cryptocurrency exchange, has filed 56 million forms for crypto transactions with the US Internal Revenue Service for the 2025 tax year. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less. The newly introduced Form 1099-DA, which only 8.5% exceeded the $600 threshold for reporting non-employee compensation, saw 74% of its filings valued at less than $50.
Each form is also sent to the customer, creating a reconciliation task for the taxpayer. Standard tax software does not support crypto transactions, and Kraken estimates that an active crypto holder will incur an additional annual burden of $250-$500 for dedicated tax software, excluding standard filing costs. The exchange argues that the time spent by taxpayers reconciling micro-transactions often results in costs that are disproportionately high compared to the revenue the IRS will collect.
According to the Tax Foundation, individual returns already cost Americans $146 billion in time and expenses, while the National Taxpayers Union Foundation estimates that non-business filers spend approximately 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 advocates for a broader, inflation-indexed exemption with anti-abuse safeguards and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.