Kraken, a cryptocurrency exchange, disclosed that it submitted 56 million crypto transaction forms to the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less.
The newly introduced Form 1099-DA, which is used for reporting cryptocurrency transactions, revealed that only 8.5% of the forms exceeded the $600 threshold, while 74% were 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 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 tax returns already cost Americans a combined $146 billion in time and expenses.
The National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return. Brokers reporting for 2025 provide gross proceeds without cost basis, resulting in forms that capture only one side of the calculation. 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 argued that even small purchases with cryptocurrency can trigger a taxable event, and that rewards earned on staked assets are treated as ordinary income, resulting in 'phantom income' if the token price falls between receipt and filing.
Kraken is advocating for a broader inflation-indexed exemption, paired with anti-abuse guardrails, and for taxpayers to be allowed to elect when staking rewards are taxed, either at receipt or at sale.