Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half of them being for $10 or less. Only 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold that triggers reporting for 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. Moreover, standard tax software does not accommodate crypto transactions, with Kraken estimating an additional burden of $250-$500 per year for dedicated tax software for active crypto holders. The exchange emphasizes that the time spent by taxpayers on 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. Kraken identifies two issues with the tax code: the lack of a minimum exemption for crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt. The exchange is advocating for a broader, inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.