Kraken, a prominent crypto exchange, has filed 56 million crypto-transaction 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, with over half being for $10 or less.
The exchange notes that only 8.5% of the newly introduced Form 1099-DAs exceeded $600, the threshold for reporting non-employee compensation, and 74% were for less than $50. Each form also requires reconciliation by the taxpayer, resulting in additional costs.
Kraken estimates that active crypto holders may incur an extra $250-$500 per year for dedicated tax software, on top of standard filing costs. The company argues that the time spent reconciling these micro-transactions generates costs 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. Kraken identifies two issues with the tax code: the lack of a de minimis exemption for crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt.
The exchange is advocating for a broader inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.