In the 2025 tax year, crypto exchange Kraken submitted approximately 56 million forms to the U.S. Internal Revenue Service (IRS) for crypto transactions. Notably, around 18.5 million of these forms were for transactions valued at less than $1, with over half of them being for $10 or less. A mere 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 is not equipped to handle crypto transactions, leading Kraken to estimate an additional burden of $250-$500 per year for dedicated tax software for active crypto holders.
The exchange emphasizes that the time spent by taxpayers on reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionately high compared to the revenue the IRS will collect. According to the Tax Foundation, individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation estimates the average time for non-business filers at about 13 hours and $290 per return. Kraken identifies 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 argues that this can result in 'phantom income' and is pushing for a broader inflation-indexed exemption, as well as the option for taxpayers to elect when staking rewards are taxed.