Kraken, a leading cryptocurrency exchange, has filed 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 being for $10 or less. This has resulted in a substantial reporting burden, with only 8.5% of the newly introduced Form 1099-DAs exceeding the $600 threshold. Furthermore, 74% of these forms were for less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer.
Kraken estimates that the additional burden on active crypto holders is between $250 and $500 per year for dedicated tax software, in addition to 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.
Kraken attributes the problems to two issues: 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 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.