Kraken, a cryptocurrency exchange, has filed 56 million cryptocurrency transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for $10 or less. The company notes that only 8.5% of the newly introduced Form 1099-DAs exceeded $600, the threshold that triggers reporting for non-employee compensation, with 74% being for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer.
Furthermore, standard tax software does not support cryptocurrency transactions, and Kraken estimates the additional burden on an active cryptocurrency holder to be between $250 and $500 per year for dedicated tax software, on top of standard filing costs. The company argues that the time spent by taxpayers reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionate 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, and the National Taxpayers Union Foundation puts the average time for non-business filers at around 13 hours and $290 per return. Kraken 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.
The company 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.