Kraken, a cryptocurrency exchange, reported filing 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, with over half being for $10 or less. The recently introduced Form 1099-DA revealed that only 8.5% of filings 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 support crypto transactions, with Kraken estimating an additional burden of $250-$500 per year for dedicated tax software.
The exchange emphasized that the time spent reconciling 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. Kraken identified 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 upon receipt. The exchange is advocating for a broader inflation-indexed exemption and the option for taxpayers to choose when staking rewards are taxed, either at receipt or at sale.