According to Kraken, a cryptocurrency exchange, it has filed 56 million forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1.
More than half of the forms were for transactions worth $10 or less. The newly introduced Form 1099-DA revealed that only 8.5% of the transactions exceeded $600, which is the threshold for reporting 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. Furthermore, 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 specialized tax software, excluding standard filing costs.
The company notes that the time spent by taxpayers reconciling these micro-transactions, often with incomplete data, generates 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. The National Taxpayers Union Foundation reports that the average time spent on non-business filers is approximately 13 hours and $290 per return.
The main issues stem from the lack of a minimum exemption threshold for cryptocurrency payments and the treatment of staking rewards as ordinary income upon receipt. Kraken argues that this results in a significant reporting burden, even for small transactions, and that the current system can lead to 'phantom income' when the token price falls between receipt and filing. The company is advocating for legislation that includes a broader, inflation-indexed exemption, as well as the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.