Kraken, a cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1. Over half of the forms were for transactions worth $10 or less. Only 8.5% of the new Form 1099-DAs exceeded the $600 threshold that 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. The company estimates that active cryptocurrency holders face an additional annual burden of $250-$500 for specialized tax software, on top of standard filing costs.
Kraken argues that the time spent reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionately high compared 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.
The National Taxpayers Union Foundation reports that the average time for non-business filers is about 13 hours and $290 per return. The lack of a de minimis exemption for cryptocurrency payments means that even small purchases can trigger a taxable event. Kraken cites the example of paying for a meal with Bitcoin, which would require looking up the cost basis of the specific Bitcoin spent, calculating whether there was a gain or loss, and reporting it on Form 8949. The company also highlights the issue of staking rewards being treated as ordinary income at the moment of receipt, which can result in 'phantom income' if the token price falls between receipt and filing.
Kraken is advocating for a broader inflation-indexed exemption, paired with anti-abuse guardrails, and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.