Kraken, a cryptocurrency exchange, reported filing 56 million crypto 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 representing transactions of $10 or less. Notably, only 8.5% of the new Form 1099-DAs exceeded the $600 threshold that triggers reporting for non-employee compensation, and 74% were for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. The company estimates that the additional burden on an active cryptocurrency holder could range from $250 to $500 per year for dedicated tax software, in addition to standard filing costs.
Kraken emphasized that the time spent by taxpayers 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 around 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 company argues that a broader, inflation-indexed exemption, paired with anti-abuse guardrails, is necessary to prevent unnecessary reporting burdens. Furthermore, Kraken is advocating for taxpayers to have the option to elect when staking rewards are taxed, either at receipt or at sale, when a gain or loss is realized.