In the 2025 tax year, cryptocurrency exchange Kraken submitted 56 million forms to the U.S. Internal Revenue Service (IRS) for cryptocurrency transactions. Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for $10 or less.
The newly introduced Form 1099-DA, which is used for reporting cryptocurrency transactions, showed that only 8.5% of the forms exceeded the $600 threshold that triggers reporting for non-employee compensation, with 74% being for less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer.
Furthermore, standard tax software does not support cryptocurrency transactions, resulting in an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken emphasized that the time spent by taxpayers on reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionate to the revenue the IRS will collect from them.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation puts the average time for non-business filers at about 13 hours and $290 per return. Kraken identified two issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange 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.