Kraken, a leading cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1. Over half of the total forms were for transactions worth $10 or less.
The data highlights the significant reporting burden imposed on taxpayers due to the lack of a minimum exemption threshold for cryptocurrency transactions. Each form is sent to both the IRS and the customer, resulting in a reconciliation task for the taxpayer.
Furthermore, standard tax software is not equipped to handle cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken emphasizes that the time spent reconciling these micro-transactions generates costs that are disproportionate to the revenue the IRS will collect. The exchange identifies two key issues with the tax code: the absence of a minimum exemption threshold for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
To address these issues, Kraken advocates for a broader, inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed.