In the 2025 tax year, cryptocurrency exchange Kraken filed a staggering 56 million forms with the U.S. Internal Revenue Service (IRS) for cryptocurrency transactions.
Notably, approximately 18.5 million of these forms pertained to transactions valued at less than $1, with over half being for $10 or less. The newly introduced Form 1099-DA revealed that only 8.5% of transactions exceeded the $600 threshold, which triggers reporting requirements 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, with Kraken estimating an additional annual burden of $250-$500 for active cryptocurrency holders. The company emphasized that the time spent by taxpayers on reconciling these micro-transactions often results in costs that are disproportionately high compared to the revenue generated for the IRS.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses, while the National Taxpayers Union Foundation reports that the average time for non-business filers is around 13 hours and $290 per return. Kraken identified two key 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.