U.S.-based cryptocurrency exchange Kraken has filed approximately 56 million crypto transaction forms with the Internal Revenue Service (IRS) for the 2025 tax year. Of these, around 18.5 million pertained to transactions valued at less than $1, with over half being for $10 or less.
The company noted in a recent blog post that only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting requirements for non-employee compensation, and 74% were for less than $50. Each form also necessitates reconciliation by the taxpayer, resulting in additional costs. Kraken estimated that active cryptocurrency holders face an extra annual burden of $250-$500 for specialized tax software, beyond standard filing expenses. The exchange emphasized that the time spent by taxpayers on reconciling these minor transactions often yields costs that are disproportionately high compared to the revenue the IRS will collect from them.
Furthermore, the Tax Foundation estimates that individual tax returns already incur a combined cost of $146 billion in time and expenses for Americans, while the National Taxpayers Union Foundation reports that the average time spent on non-business tax returns is about 13 hours, costing $290 per return. The main issues stem from the lack of a de minimis exemption for cryptocurrency payments and the taxation of staking rewards as ordinary income upon receipt, which can lead to 'phantom income' if the token's value decreases. Kraken advocates for a broader, inflation-indexed exemption and the option to tax staking rewards at the time of sale, rather than receipt.