Kraken, a leading cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service 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. The company highlights that only 8.5% of the new Form 1099-DA exceeded the $600 threshold, which triggers reporting requirements for non-employee compensation.
A significant 74% of the forms were for less than $50. Each form also requires reconciliation by the taxpayer, adding to the administrative burden. Furthermore, standard tax software does not support cryptocurrency transactions, resulting in additional costs for taxpayers.
Kraken estimates that active cryptocurrency holders may incur extra costs of $250-$500 annually for specialized tax software, on top of standard filing costs. The company notes that the time spent by taxpayers on reconciling these micro-transactions often results in costs that are disproportionate to the revenue generated for the IRS. The Tax Foundation estimates that individual tax returns already cost Americans a combined $146 billion in time and expenses. Kraken identifies two key issues with the current 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 these issues lead to an excessive reporting burden and proposes legislative changes, including a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed.