Kraken, a cryptocurrency exchange, has filed 56 million forms for crypto transactions with the US Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for $10 or less. The company notes that only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, and 74% were for less than $50. Each form is sent to the customer, creating a reconciliation task for the taxpayer.
Standard tax software does not handle cryptocurrency transactions, resulting in an additional burden on active crypto holders, estimated at $250-$500 per year. Kraken argues that the time spent reconciling these micro-transactions generates costs disproportionate to the revenue the IRS will collect.
The Tax Foundation estimates that individual returns already cost Americans $146 billion in time and expenses. The exchange identifies 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. Kraken is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed.