Kraken, a cryptocurrency exchange, has filed 56 million 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 the $600 threshold, which triggers reporting for non-employee compensation, while 74% were for less than $50. Each form also requires the customer to reconcile the transaction, resulting in additional tasks for taxpayers.
Standard tax software does not support cryptocurrency transactions, leading to an estimated extra burden of $250-$500 per year for active cryptocurrency holders. Kraken argues that the time spent on reconciling these micro-transactions generates costs that are disproportionate to the revenue the IRS will collect from them.
The Tax Foundation estimates that individual tax returns already cost Americans a combined $146 billion in time and expenses, with the National Taxpayers Union Foundation estimating an average of 13 hours and $290 per return for non-business filers. Brokers reporting for 2025 provide gross proceeds without cost basis, resulting in thousands of client questions about incomplete forms. 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 exchange suggests that a broader inflation-indexed exemption, paired with anti-abuse measures, could help alleviate these issues.
Additionally, Kraken proposes allowing taxpayers to choose when staking rewards are taxed, either at receipt or at sale, and notes that its systems already support both reporting methods.