Kraken, a cryptocurrency exchange, has filed 56 million forms for crypto transactions with the US Internal Revenue Service for the 2025 tax year. Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for $10 or less. Only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, with 74% being for less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer.
Standard tax software does not accommodate crypto transactions, and Kraken estimates the additional burden on an active crypto holder to be between $250 and $500 per year for dedicated tax software, on top of standard filing costs. The company notes that the hours spent reconciling these micro-transactions often result in costs that are disproportionate to the revenue the IRS will collect.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. 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 crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt. The company argues that buying small items with cryptocurrency can trigger a taxable event, and staking rewards can result in 'phantom income' if the token price falls.
Kraken is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.