Kraken, a leading cryptocurrency exchange, has filed approximately 56 million crypto transaction forms with the US Internal Revenue Service (IRS) for the 2025 tax year, with around 18.5 million of these forms covering transactions valued at less than $1. Over half of the transactions were valued at $10 or less. According to Kraken, only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which triggers reporting requirements 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.
Standard tax software does not support cryptocurrency transactions, and Kraken estimates that the additional burden on active cryptocurrency holders is between $250 and $500 per year for dedicated tax software, in addition to standard filing costs. The company argues that the time spent by taxpayers reconciling these micro-transactions often results in costs that are disproportionately high compared to the revenue the IRS will collect from them.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while 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 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 company argues that even small purchases made with cryptocurrency can trigger a taxable event, and that rewards earned from staked assets are taxed at the moment of receipt, regardless of whether they are sold.
Kraken is advocating for legislation that includes a broader, inflation-indexed exemption and allows taxpayers to choose when staking rewards are taxed, either at receipt or at sale.