Kraken, a cryptocurrency exchange, has filed 56 million cryptocurrency transaction forms with the US Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these transactions were valued at less than $1, and over half were worth $10 or less. The company noted 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 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 active cryptocurrency holders to be between $250 and $500 per year for dedicated tax software, excluding standard filing costs.
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 client questions about forms that only capture one side of the calculation. Kraken identifies two issues with the tax code: the lack of a low-level exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
The company argues that buying small items with cryptocurrency can trigger a taxable event, and staking rewards can result in 'phantom income' if the token price falls. Kraken is advocating for a broader, inflation-indexed exemption and the option to tax staking rewards at sale rather than receipt.