In the 2025 tax year, cryptocurrency exchange Kraken filed approximately 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS). Notably, around 18.5 million of these forms pertained to transactions valued at less than $1, while over half were for $10 or less. Only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, with 74% being for less than $50.
Each form is also sent to the customer, creating a reconciliation task for the taxpayer. Moreover, standard tax software does not support crypto transactions, resulting in an estimated additional burden of $250-$500 per year for dedicated tax software for active crypto holders. Kraken emphasized that the time spent reconciling these micro-transactions generates costs 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, with the National Taxpayers Union Foundation reporting an average time of 13 hours and $290 per return for non-business filers.
Brokers reporting for 2025 provide gross proceeds without cost basis, leading to client inquiries about forms that only capture one side of the calculation. Kraken identified 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 exchange advocates for a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.