Kraken, a cryptocurrency exchange, has filed approximately 56 million forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with around 18.5 million of these forms covering transactions valued at less than $1. More than half of the transactions reported were worth $10 or less.
According to Kraken, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting requirements for non-employee compensation, while 74% were valued at less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Standard tax software does not support cryptocurrency transactions, and Kraken estimates that active crypto holders may incur additional costs of $250-$500 per year for specialized tax software, excluding standard filing fees. The company argues that the time spent by taxpayers on reconciling these minor transactions, often with incomplete data, leads to costs that are disproportionately high compared to the revenue the IRS will collect.
The Tax Foundation estimates that individual tax returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation reports that the average time spent on non-business tax returns is around 13 hours, with an average cost of $290 per return. Kraken identifies two issues with the tax code: the lack of a minimum exemption threshold for cryptocurrency payments, which can result in taxable events for small purchases, and the treatment of staking rewards as ordinary income at the time of receipt.
The company is advocating 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.