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. 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 accounts for only 8.5% of transactions exceeding $600, has resulted in a substantial reporting burden for taxpayers. Furthermore, 74% of these forms were for transactions under $50.
Each form is also sent to the customer, creating an additional reconciliation task for the taxpayer. Standard tax software often fails to handle cryptocurrency transactions, resulting in an estimated additional burden of $250-$500 per year for active cryptocurrency holders. Kraken emphasized that the time spent reconciling these micro-transactions generates costs that are disproportionately high compared to the revenue the IRS will collect from them.
The Tax Foundation estimates that individual tax 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 approximately 13 hours and $290 per return. Brokers reporting for 2025 provide gross proceeds without cost basis, resulting in forms that capture only one side of the calculation.
Kraken identified two key 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. For instance, purchasing a meal with Bitcoin can trigger a taxable event, requiring the buyer to calculate and report any gain or loss on the transaction.
Similarly, staking rewards are taxed at the moment of receipt, regardless of whether the tokens are sold. Kraken argues that this can result in 'phantom income' if the token price falls between receipt and filing.
To address these issues, Kraken is advocating for a broader, inflation-indexed exemption, paired with anti-abuse guardrails, as well as the option for taxpayers to elect when staking rewards are taxed.