For the 2025 tax year, cryptocurrency exchange Kraken filed 56 million forms with the U.S. Internal Revenue Service (IRS) related to cryptocurrency transactions.
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. Notably, 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 is not equipped to handle cryptocurrency transactions, leading Kraken to estimate that active cryptocurrency holders may incur an additional annual burden of $250-$500 for dedicated tax software, on top of standard filing costs. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. Kraken identifies two primary issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income upon receipt.
The exchange advocates for a broader, inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.