Kraken, a prominent crypto exchange, has filed approximately 56 million cryptocurrency transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Notably, around 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less.
The newly introduced Form 1099-DA, which is used for reporting these transactions, reveals that only 8.5% of the filings exceeded the $600 threshold, while 74% were for less than $50. Each form also requires the customer to reconcile the transaction, resulting in additional tasks for taxpayers. Furthermore, standard tax software often fails to accommodate crypto transactions, leading Kraken to estimate an extra burden of $250-$500 per year for dedicated tax software. The company emphasizes that the time spent reconciling these micro-transactions generates costs that are disproportionately high compared 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 around 13 hours and $290 per return. Kraken identifies two key issues with the tax code: the lack of a de minimis exemption for crypto payments, which can trigger a taxable event even for small purchases, and the treatment of staking rewards as ordinary income at the moment of receipt.
The company advocates for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.