Kraken, a leading cryptocurrency exchange, has filed 56 million forms with the US Internal Revenue Service (IRS) for the 2025 tax year, with approximately 18.5 million of these forms covering transactions valued at less than $1 and over half representing transactions of $10 or less. Only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, while 74% were for less than $50. Each form is also sent to the customer, creating a reconciliation task for the taxpayer. Kraken estimates that the additional burden on active cryptocurrency holders could range from $250 to $500 per year for specialized tax software, on top of standard filing costs.
The company argues that the time spent by taxpayers on reconciling these micro-transactions, often with incomplete data, generates costs that are disproportionate 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 puts the average time for non-business filers at 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 suggests that a broader, inflation-indexed exemption, paired with anti-abuse measures, could help alleviate the reporting burden.
Additionally, Kraken proposes that taxpayers should be allowed to choose when staking rewards are taxed, either at receipt or at sale, when a gain or loss is realized.