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, and over half were for $10 or less.
The newly introduced Form 1099-DA, which accounts for only 8.5% of the filings above the $600 threshold, highlights the issue of excessive reporting. Furthermore, 74% of the forms were for less than $50. Each form is also sent to the customer, resulting in a reconciliation task for the taxpayer. Moreover, standard tax software does not support cryptocurrency transactions, leading to an estimated additional burden of $250-$500 per year for dedicated tax software, on top of standard filing costs, for active cryptocurrency holders.
The Tax Foundation estimates that individual returns already cost Americans a combined $146 billion in time and expenses. The National Taxpayers Union Foundation reports that the average time for non-business filers is approximately 13 hours and $290 per return. Two primary issues contribute to the problems: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt.
Kraken advocates for a broader, inflation-indexed exemption with anti-abuse guardrails and the option for taxpayers to elect when staking rewards are taxed, either at receipt or at sale.