Kraken, a cryptocurrency exchange, has filed 56 million forms for cryptocurrency transactions 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, and over half were for $10 or less. The newly introduced Form 1099-DA, which accounts for only 8.5% of transactions exceeding $600, poses a substantial challenge due to the vast number of micro-transactions that fall below this threshold.
Furthermore, 74% of the forms were for amounts less than $50. Each form is sent to both the customer and the IRS, resulting in a reconciliation task for the taxpayer. The lack of standard tax software support for cryptocurrency transactions exacerbates the issue, with Kraken estimating an additional annual burden of $250-$500 for dedicated tax software.
The current tax code, particularly the absence of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income upon receipt, contributes to this complexity. Kraken advocates for a broader, inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or upon sale.