Kraken, a cryptocurrency exchange, revealed that it submitted 56 million crypto-transaction forms to the U.S. Internal Revenue Service (IRS) for the 2025 tax year.
Approximately 18.5 million of these forms pertained to transactions valued at less than $1, while over half were for $10 or less. The newly introduced Form 1099-DA, which only 8.5% of the time exceeded the $600 threshold for reporting non-employee compensation, was predominantly used for transactions under $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer.
Moreover, standard tax software does not support crypto transactions, leading Kraken to estimate an additional annual burden of $250-$500 for active crypto holders. The company emphasized that the time spent reconciling micro-transactions often results in 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, while the National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return. Kraken identified 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 company argues that a broader inflation-indexed exemption, paired with anti-abuse guardrails, is necessary to alleviate the reporting burden. Additionally, Kraken advocates for allowing taxpayers to choose when staking rewards are taxed, either at receipt or at sale, to provide more flexibility.