Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the US Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms were for transactions valued at less than $1, while over half were for $10 or less. Only 8.5% of the new 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, creating a reconciliation task for the taxpayer.
Standard tax software does not support crypto transactions, and Kraken estimates that active crypto holders face an additional burden of $250-$500 per year for dedicated tax software, on top of standard filing costs. The company argues that the time spent reconciling these micro-transactions generates 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. Brokers reporting for 2025 provide gross proceeds without cost basis, resulting in forms that capture only one side of the calculation.
Kraken identifies two 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. The company advocates for a broader inflation-indexed exemption and the option to tax staking rewards at sale, rather than at receipt.