In the 2025 tax year, cryptocurrency exchange Kraken filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS). Approximately 18.5 million of these forms were for transactions valued at less than $1, with over half being 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, 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 to an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken emphasizes that the time spent by taxpayers reconciling these micro-transactions, often with incomplete data, generates 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. The National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return. Brokers reporting for 2025 provide gross proceeds without cost basis, leading to forms that capture only one side of the calculation.
Kraken received thousands of client inquiries about these forms. Two key issues with the tax code are the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt. For instance, using Bitcoin to pay for a meal can trigger a taxable event, requiring the taxpayer to calculate the cost basis and report it on Form 8949. Similarly, staking rewards are taxed at the moment of receipt, based on the token's market price, even if the tokens are not sold.
Kraken 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.