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 pertained to transactions valued at less than $1, with over half being for $10 or less. According to Kraken, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, while 74% were for less than $50. The company noted that each form is also sent to the customer, creating a reconciliation task for the taxpayer.
Furthermore, standard tax software does not support crypto transactions, resulting in an estimated additional burden of $250-$500 per year for active crypto holders. Kraken emphasized 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. 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 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 argues that a broader inflation-indexed exemption, paired with anti-abuse guardrails, is necessary to alleviate the reporting burden.
Additionally, Kraken is advocating for taxpayers to be allowed to elect when staking rewards are taxed, either at receipt or at sale.