Kraken, a cryptocurrency exchange, has filed 56 million cryptocurrency transaction forms 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, with over half being for $10 or less. According to Kraken, only 8.5% of the newly introduced 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 cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken noted that the time spent by taxpayers on reconciling micro-transactions often results in 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.
Brokers reporting for 2025 provide gross proceeds without cost basis, leading to client inquiries about forms that only capture one side of the calculation. Kraken identified two issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
The exchange advocates for a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.