Kraken, a cryptocurrency exchange, has filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1 and over half for $10 or less. According to the company, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, and 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 does not support cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for dedicated tax software. Kraken emphasizes that the time spent by taxpayers on reconciling these micro-transactions generates costs disproportionate to the revenue the IRS will collect. The company attributes the problems to two aspects of 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.
To address these issues, Kraken is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed.