Kraken, a cryptocurrency exchange, has filed 56 million forms with the IRS for the 2025 tax year, covering various crypto transactions. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, while over half were for $10 or less. The newly introduced Form 1099-DA revealed that only 8.5% of the transactions exceeded the $600 threshold, which necessitates reporting for non-employee compensation, and 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, leading Kraken to estimate an additional burden of $250-$500 per year for active crypto holders. The company emphasizes 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. 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 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.