Kraken, a cryptocurrency exchange, has filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Of these, approximately 18.5 million transactions were valued at less than $1, and over half were for $10 or less. This has significant implications for taxpayers, as each form must also be sent to the customer, resulting in a reconciliation task. Furthermore, standard tax software does not support cryptocurrency transactions, leading to additional costs for taxpayers.
Kraken estimates that active cryptocurrency holders may incur an additional $250-$500 annually for dedicated tax software, beyond standard filing costs. The exchange argues that the time spent reconciling these micro-transactions generates costs that are disproportionate to any revenue the IRS will collect. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. Kraken identifies two key 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 is advocating for a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.