Crypto Investors Have 1099 Problems, But Cointracker Helps Make Sure Tax Filing Isn’t One – TechCrunch

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The coming tax season is likely to be particularly complex for crypto investors, many of whom will pay taxes on their crypto holdings for the first time ever. In the US, the crypto industry will also struggle with new rules in the recently passed $1.2 billion infrastructure law that apply to digital assets, including a requirement for crypto exchanges to disclose their profits and share names and addresses. provide to their customers.

Exchanges are doing their part to prepare for the impending deposits. Coinbase, one of the world’s largest crypto exchanges, announced an exclusive partnership with crypto tax and portfolio tracking provider CoinTracker earlier this week, meaning Coinbase users can access CoinTracker’s software at a discounted price.

More than 3% of the entire global cryptocurrency market, which represents more than $50 billion in digital assets, is tracked on CoinTracker, CEO and co-founder Jon Lerner told TechCrunch in an interview. The platform allows users to see all their crypto activities, including NFTs and decentralized finance (DeFi), in one place. More than 100 different exchanges and dozens of blockchains are natively integrated on CoinTracker, making it easy for users to get a complete picture of their crypto holdings, Lerner said.

The company announced today that it has raised a $100 million Series A round led by Accel, valuing the company at $1.3 billion. Both existing and new investors participated in Series A, including General Catalyst, Initialized Capital, Y Combinator Continuity, 776 Ventures, Coinbase Ventures, Intuit Ventures, Kraken Ventures and a number of prominent angel investors from fintech and crypto companies.

CoinTracker's interface on desktop and mobile

CoinTracker’s interface on desktop and mobile Image Credits: coin tracker

CoinTracker last raised $1.5 million for its seed round in 2018, when Lerner noticed that the crypto markets were evolving in a significant way.

“In 2018, there were a few top exchanges and people started playing with Ethereum. Now DeFi and NFTs have really gotten big. We will continue to see an increase in use cases in crypto,” Lerner said. He hopes to use the funding to broaden CoinTracker’s breadth and depth of integrations to support as many use cases as possible.

CoinTracker plans to use the funding to scale to 10 million users over the next three years, Lerner added, though he declined to share how many users it has today. It also plans to expand its team, starting with two new hires it has announced in conjunction with the fundraiser: a new chief of engineering and product leader, Gaurav Garg and Zack Reneau-Weeden. Garg was previously a VP of engineering at Uber and Google, and Reneau-Weeden was head of product at Robinhood’s crypto arm, according to the company.

The company grew its team from 10 people in early 2021 to about 40 people today, Lerner said. He expects CoinTracker’s workforce to grow to 100 or more people by the end of 2022.

While CoinTracker’s portfolio tracking functionality has users around the world, its technical support services are currently only available to customers in the US, UK, Canada and Australia. Portfolio tracking on the platform is free for users who need only basic functionalities, and is available to customers with a broader set of needs starting at $14 per month.

For US-based users with relatively basic crypto holdings, an annual tax plan with CoinTracker is free. The company’s paid tax offerings range from $49 a year to “several hundreds,” depending on the complexity of the user portfolio, Lerner said.

The portfolio tracker enables tax functionality by collecting the data a user needs to submit year-round and submitting it with the click of a button, Lerner said. The ease of use of the product was the biggest driver behind the traction, he noted.

When asked about the risks the company faces, Lerner said the biggest is that the crypto industry as a whole may not become tax compliant in time to avoid being hit by fines and audits. A lack of awareness and education about paying taxes on digital assets is one of the biggest hurdles for users, he added.

“It’s kind of our job to help people make an informed decision about how they can reasonably do this. We just take the friction out and make it super easy. You just plug in your wallets, connect your exchanges, everything, retroactively, and it syncs automatically in the future. We’ll introduce smart defaults,” Lerner said. “If you’re a power user or working with a CPA, you can tweak those advanced settings. But taking a fairly smart standard approach takes the friction away.”

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