In the 2025 tax year, Kraken, a leading cryptocurrency exchange, filed approximately 56 million crypto-transaction forms with the U.S. Internal Revenue Service (IRS).
Notably, around 18.5 million of these forms were for transactions valued at less than $1, with over half of them being for $10 or less. A mere 8.5% of the newly introduced Form 1099-DAs exceeded the $600 threshold, which 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 accommodate crypto transactions, with Kraken estimating an additional annual burden of $250-$500 for active crypto holders.
The exchange emphasizes that the time spent reconciling these micro-transactions often generates costs that are disproportionately high compared to the revenue the IRS will collect. The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. Brokers reporting for 2025 provide gross proceeds without cost basis, leading to client questions about forms that only capture one side of the calculation. Kraken identifies two key issues with the tax code: the lack of a de minimis exemption for crypto payments and the treatment of staking rewards as ordinary income at the moment of receipt.
The exchange advocates for a broader, inflation-indexed exemption and the option for taxpayers to elect when staking rewards are taxed.