Kraken, a cryptocurrency exchange, has filed 56 million cryptocurrency transaction forms with 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 only 8.5% exceeded the $600 threshold for non-employee compensation, saw 74% of its filings valued at less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer.
Furthermore, standard tax software does not accommodate cryptocurrency transactions, resulting in an estimated additional burden of $250-$500 per year for dedicated tax software for active cryptocurrency holders. Kraken 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 from them.
The Tax Foundation estimates that individual 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 about 13 hours and $290 per return. Brokers reporting for 2025 provide gross proceeds without cost basis, leading to client questions about forms that only capture one side of the calculation.
Kraken identifies 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 argues that even small purchases with cryptocurrency can trigger a taxable event, and staking rewards can result in 'phantom income' if the token price falls between receipt and filing. Kraken proposes a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.