Even with the end of the most recent income tax season in the United States, the SEC, CFTC, and IRS have yet to provide clear-cut regulation and compliance mandates for crypto investors since their initial notice back in 2014. Cointaxes plans to establish itself as the platform that can help educate individual investors on the nuanced aspects of crypto tax regulation. I recently sat down with its CEO to gain more insight on how his team plans to provide value to consumers within such a nascent space.
Prior to Cointaxes, Chris worked as an investment banker for Jefferies Group, and then in private equity for the venture capital arm of Virgin Group (under Sir Richard Branson). In between those two stints and Cointaxes, Chris worked extensively with a wide array of startups as an angel investor. He observed, firsthand, the business development process for startups in their infancy. After working with dozens of startups through an incubator in New York City, he met one of his cofounders for Cointaxes.
It was at this point in 2017, after having been an investor in the crypto space for a little over a year, that Chris realized there was no effective way for consumers to pay taxes on their cryptocurrency capital gains. He had an in-depth discussion with his personal accountant on roundabout ways to withhold liability- but one thing was clear: no one in the space could effectively educate consumers or provide a user-friendly platform for them to pay their taxes. More importantly, a considerable degree of standardization and technical work goes into a tax product. From a user perspective, it does not make sense to develop and maintain a system. Ironically, development efforts for tax reporting should be centralized to a degree, according to Chris.
Chris immediately connected with tax professionals, lawyers, thought leaders within the space through the biggest crypto-related podcasts. From that, he discovered a slew of complaints in the absence of a valuable platform to pay crypto taxes. He discovered a pressing need to be filled.
“The legal and accounting community began gushing about features and tools that’d be most ideal to not only tax professionals, but consumers alike.”
Chris and his team put together a quarter of a million dollars to begin developing Cointaxes. From the get-go, they had scalability in mind. They most recently integrated with iComply to stay on top of the most relevant KYC and AML regulations for particular tokens. The long-term vision is to integrate with other third-party portfolio tracking tools, crypto-lending platforms, and cryptocurrency exchanges to make tax compliance as accessible and easy as possible.
Considering the uncertainty brewing within the space on both ends of authorities and consumers, Chris and his team aim to establish confidence within the space. A good number of the public still believes trading cryptocurrency is not legitimate or illegal, but enough legislative groundwork has been laid to facilitate a rudimentary (at the very least) process. iComply is great at making sure ICOs are compliant with KYC and AML regulations. Bittrex is putting in significant efforts to work with institutions around the US. Circle’s Stablecoin and Tether are well-intentioned efforts to anchor the cryptocurrency market, according to Chris.
Chris went as far as creating a whole Youtube series on the current status of tax regulations for cryptocurrency in the United States. He notes, however, that one should consult a tax professional as the most reliable means for filing for taxes. Nonetheless, the Youtube series provides a solid baseline understanding of crypto-related tax regulations. He’s also been featured on the Crypto Token Podcast, which can be found here. Cointaxes offers support for Coinbase, Binance, GDAX, Gemini, Bittrex, Kraken, Bitstamp, Poloniex, and Bitfinex.