Kraken, a cryptocurrency exchange, has filed 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1. Over half of the forms were for transactions worth $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 is also sent to the customer, resulting in a reconciliation task for the taxpayer. Furthermore, standard tax software does not support 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 National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return. Kraken identifies two problems 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 suggests that a broader inflation-indexed exemption, paired with anti-abuse guardrails, could address these issues. Additionally, Kraken proposes allowing taxpayers to elect when staking rewards are taxed, either at receipt or at sale, to provide more flexibility.