Kraken, a cryptocurrency exchange, has filed 56 million forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1. Over half of the forms were for transactions worth $10 or less. The company notes that 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 also requires the customer to reconcile the transaction, resulting in additional tasks for taxpayers. Furthermore, standard tax software does not support cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for active cryptocurrency holders.
Kraken 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 tax returns already cost Americans $146 billion in time and expenses, with the average time for non-business filers being around 13 hours and $290 per return. Brokers reporting for 2025 provide gross proceeds without cost basis, resulting in forms that only capture one side of the calculation.
Kraken received thousands of client inquiries about these forms. The company identifies two issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
Kraken proposes a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.