Kraken, a cryptocurrency exchange, has filed 56 million cryptocurrency transaction forms with the US Internal Revenue Service 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 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 is not equipped to handle 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 returns already cost Americans a combined $146 billion in time and expenses. The exchange attributes the problems to two main issues: 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 is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed.