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 were for transactions valued at less than $1, with over half being for $10 or less. The newly introduced Form 1099-DA reveals that only 8.5% of the transactions exceeded $600, the 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. Furthermore, standard tax software does not support cryptocurrency transactions, leading Kraken to estimate an additional burden of $250-$500 per year for dedicated tax software, on top of standard filing costs.
The exchange argues that the time spent reconciling these micro-transactions 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 about 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 exchange proposes a broader inflation-indexed exemption, paired with anti-abuse guardrails, and suggests allowing taxpayers to elect when staking rewards are taxed, either at receipt or at sale.