Kraken, a major cryptocurrency exchange, has filed approximately 56 million crypto-transaction forms with the US Internal Revenue Service for the 2025 tax year. Notably, around 18.5 million of these forms pertained to transactions valued at less than $1, with over half involving amounts of $10 or less. The company noted that a mere 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting requirements 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 is not equipped to handle cryptocurrency transactions, with Kraken estimating the additional burden on an active crypto holder to be between $250 and $500 per year for dedicated tax software, excluding standard filing costs.
The exchange emphasized that the time spent by taxpayers reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionately high compared to the revenue the IRS will collect from them. According to the Tax Foundation, 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, which means even small purchases can trigger a taxable event, and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange is advocating for a broader, inflation-indexed exemption, paired with anti-abuse guardrails, as well as the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.