Kraken, a cryptocurrency exchange, reported that it submitted 56 million crypto transaction forms to 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, with over half being for $10 or less. Only 8.5% of the newly introduced 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, creating a reconciliation task for the taxpayer. Standard tax software does not handle cryptocurrency transactions, resulting in an estimated additional burden of $250-$500 per year for active cryptocurrency holders. The Tax Foundation estimates that individual returns already cost Americans $146 billion in time and expenses, with the National Taxpayers Union Foundation stating that the average time for non-business filers is about 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.
Two key issues with the tax code are 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 argues that a de minimis exemption and the option to tax staking rewards at sale, rather than receipt, would alleviate these issues.