You can also listen to the complete article and interview here:
To remedy the situation, we are going to include CryptoTrader.Tax in our comparison shortly. In addition, we have interviewed David Kemmerer, CEO of CryptoTrader.Tax.
Like most people, David entered the crypto space in 2017 and started actively trading in the space. Soon, it became evident that all the transactions he and his partners were involved in needed to be reported for tax purposes. However, there was not an easy solution in the market.
All the solutions at the time were too complex or inefficient.
David and his Partners took matters into their own hands and took a break from trading to work on a solution that helps traders in the crypto space assimilate and report trading transactions for tax purposes easily and efficiently.
Thus, Cryptotrader.Tax was born.
Focus on the user interface
From the get-go, the team has focused on one goal: customer satisfaction through easy-to-use solutions.
They stayed true to this goal. Their interface is very easy to use and helps users load the transactions from the exchanges directly through API and translate them into easy-to-report tax reporting forms. For the exchanges not supported, users can upload the transaction data into Cryptotrader.Tax easily.
The whole process of loading data to reporting transactions involves just five simple steps.
Find the tax advisor right on the platform
Not everyone wants to understand the tax rules. To make things even more convenient, Cryptotrader.Tax lists tax advisors on their platform.
Each of these tax advisors is vetted by David and his team to ensure they have the knowledge, credentials and expertise to help the clients.
Cryptotrader.Tax does not have any affiliations with these tax advisors, so taxpayers can pick and choose whoever appeals to them and fits their needs.
Impressive customer care
True to their goal, CryptoTrader.Tax sends a personal feedback request as soon as you sign up. The team is constantly looking to improve the interface to make it simple for users to report their transactions.
Users will find the simple five-step process easy to follow.
Cryptotrader.Tax is scheduled to provide assistance in Canada and the UK. They already have solutions underway in Australia.
David expects that the trend will continue and the demand for their solution to grow from many other locations around the world.
Keeping the product simple and efficient while accommodating for the complex rules in the background helps them expand to newer locations faster.
In addition to expanding internationally, David’s team is working on bringing a solution for tax preparers so they can serve their clients with crypto transactions efficiently.
Impending IRS guidance may not be earth-shattering
Talking about the guidance promised by the IRS this year, David said, “I think rules may not be super beneficial to cryptotraders. I think coin-to-coin will continue to be considered taxable transactions. One thing that could come out of the new regulations is the clarification around cost basis methodology.”
Talking about ambiguity surrounding some specific transactions unique to crypto space, David was optimistic that IRS may provide some clarity around forks and airdrops. “IRS may give guidance on forks and airdrops, whether it is to treat it as income or a cost basis of 0 on the asset,” he said.
Securitization of illiquid assets is coming faster than people realize
Creating liquidity by bringing them onto security token platforms is making strides in the space. We covered in the Crypto news about Securitize becoming an SEC registered transfer agent.
Many companies are bringing innovative ideas to the space.
Soon, we may have companies converting their illiquid assets (like machinery, real estate, etc.) to security tokens to raise capital, whenever the need arises. This will ease the liquidity problems without having to take a new loan.
“Securitization of illiquid assets on to security tokens is going to be the future that this space takes. It is coming faster than people realize,” David said.
We agree with David’s views. Securitization, along with crypto lending, will be a few of the use cases that will become mainstream before others, in our opinion.
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CryptoTapas: What got you started on the blockchain and Bitcoin journey?
Like most people who learned about Bitcoin in 2017, I was introduced to the hype during the summer of 2017. Me and my partners who are traders were working on software to trade on Binance. With that came the tax problem.
Every single trade we made was a taxable event to be reported on Form 8949. It dawned on us that there was no good way to report these numerous transactions to stay in the good graces of the law.
We searched on the internet, but the solutions that were available were not really as good as we were hoping.
The user experience was not fantastic.
That got us started on this journey of building a minimum viable product to test the demand to see if there is a demand. And that same winter of 2017, CryptoTrader.Tax was born.
CryptoTapas: What is your elevator pitch for CryptoTrader? What one problem does it solve better than other crypto tax software?
Cryptotrader.tax helps everyone who invests and transacts in cryptocurrencies to automatically complete the tax forms to file their tax returns. What we do better than others is make the whole process simple and easy for traders and amateurs, anyone who is dabbling in cryptocurrency.
Most people do not want to learn the rules, they want to be able to trust the solution to help them file an accurate tax return without spending an exorbitant amount of time and focus, and that is what Cryptotrader.Tax helps them achieve in the most simple and easy way possible.
We have a simple five-step process to complete the tax forms.
CryptoTapas: How many crypto exchanges do you support?
We support 25 crypto exchanges directly. However, users can still import data from any exchange using the generic csv data import module. We also support Exodus wallet, as that wallet allows users to trade within the wallet.
CryptoTapas: You guys support LIFO and FIFO methods, right?
At the moment, yes. However, we are rolling to Canada and the UK where average cost and HIFO methods are acceptable, so those two methods will be available soon.
CryptoTapas: You list crypto tax advisors on your platform; how do you choose them?
The tax advisors listed are not associated with the platform. It is our way of helping out taxpayers who come to our platform and need professional help. I get on the phone with every single tax advisor that gets listed to understand what their capabilities are and only add those who have the experience and knowledge of the space.
CryptoTapas: Where do you see CryptoTrader in the next three years?
Even three years is a long time in crypto space. While it is difficult to gauge where this industry is going, I will tell you what our plans are. Our focus right now is to expand internationally. We just launched in Australia, and we are launching in Canada and the UK by December 2019, and then a number of other countries will follow.
We are also focusing on developing the core business that we have, which is to enable the consumer ‘do-it-yourself’ tax filing approach by partnering with big companies in the space. That is a big focus.
We also see ourselves going into service with tax professionals who serve crypto tax clients. Tax professionals managing multiple clients run into a host of problems that consumers do not have. For instance, we want to help them to seamlessly integrate taxpayer information without the need for providing sensitive information like API keys or passwords.
CryptoTapas: How big of a team is at Cryptotrader.Tax?
We have five full-time employees who are predominantly engineers. We have a team of three to five advisors on the tax side. We have another 3 people on the sales and marketing side on a contract basis. We have a small legal team of one to two.
We believe in concurring one problem at a time. When you try to conquer everything, you conquer nothing.
CryptoTapas: How do you see crypto and blockchain space evolve as we move forward?
There is a lot that could become of the blockchain industry, but I will talk about things that I am excited about.
Securitization of illiquid assets on to security tokens is going to be the future that this space takes. It is coming faster than people realize.
Some companies have already secured the Regulation A approvals from SEC.
This will allow the private equity of startups put it on a blockchain type asset, and now it becomes transferable and liquid which you can sell on the secondary market.
CryptoTapas: Do you think the impending tax guidance from the IRS will be sensible or unnecessarily complex?
We are anxious to get the guidance, as there is still so much ambiguity when it comes to how people should be treating certain transactions. It is frustrating since it directly impacts what we do.
In terms of whether the rules will be sensible, I think the rules may not be super beneficial to cryptotraders. I think coin-to-coin will continue to be considered taxable transactions.
One thing that could come out of the new regulations is the clarification around cost basis methodology. They may lean toward FIFO.
They may also give guidance on forks and airdrops, whether to treat it as income or a cost basis of 0 on the asset.
I do not expect huge sweeping changes from my perspective.
Either way, we really need the guidance to come out sooner rather than later.
CryptoTapas: How do you discipline yourself to stay away from the digital noise?
Everything moves so fast in this space. I was on vacation for a few days, and by the time I came back, there were so many things that have already shifted.
So, it is quite a challenge to discipline yourself.
I think being aware is probably one of the key disciplines that helps me. Remembering that this is not all of life and there is more to life.
I stay aware of the goals for my personal life and career, and that will help you to drive through life sensibly.
CryptoTapas: Do you have anything you want to let our audience know that we have not covered?
We have one of the better affiliate programs, about 25% recurring commissions for people to help spread the word. If anyone has any questions, they can reach out to me. I am pretty easy to reach out to.
CryptoTapas: Thank you for the opportunity, It was a pleasure talking to you.
Thank you for reading the article.
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About the author
RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.