Kraken, a leading crypto 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 covered transactions valued at less than $1, with over half of them being for $10 or less. The exchange notes that only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, and 74% were for less than $50.
Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Furthermore, standard tax software does not handle crypto transactions, leading to an estimated additional burden of $250-$500 per year for active crypto holders. Kraken argues that the hours spent reconciling these micro-transactions generate costs that are disproportionate to the revenue the IRS will collect.
The exchange identifies two key 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. Kraken 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.