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, while over half were for $10 or less. The data reveals that only 8.5% of the newly introduced Form 1099-DAs exceeded $600, the threshold for reporting non-employee compensation, with 74% being 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 crypto transactions, leading to an estimated additional burden of $250-$500 per year for active crypto holders. Kraken emphasizes that the time spent reconciling these micro-transactions generates costs disproportionately higher than the revenue the IRS will collect.
The Tax Foundation estimates that individual returns already cost Americans $146 billion in time and expenses, with the National Taxpayers Union Foundation reporting an average time of 13 hours and $290 per return for non-business filers. The exchange identifies two key 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.
Kraken 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.