According to Kraken, a prominent cryptocurrency exchange, it submitted 56 million cryptocurrency transaction forms to the US Internal Revenue Service (IRS) for the 2025 tax year. Notably, approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less.
The newly introduced Form 1099-DA revealed that only 8.5% of the filings exceeded the $600 threshold, which triggers reporting for non-employee compensation, while 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 is not equipped to handle cryptocurrency transactions, leading Kraken to estimate an additional burden of $250-$500 per year for dedicated tax software for active cryptocurrency holders. The exchange emphasized that the time spent by taxpayers reconciling these micro-transactions often results in costs that are disproportionately high compared to the revenue the IRS will collect from them.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return. Kraken identified two key issues with the tax code: the lack of a minimum exemption for cryptocurrency payments, which can trigger a taxable event even for small purchases, and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange advocates for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.