Dariusz Kachel, Founder and CEO
On October 31, 2008, when half of the world was slowly getting into the groove of the holiday season with Halloween, a person or group under the name Satoshi Nakamoto decided to fashion their own version of ‘trick or treat’ by publishing a breakthrough whitepaper, “Bitcoin—A Peer to Peer Electronic Cash System.” It was indeed a treat for the financial tech landscape as the paper dealt with the idea of decentralised and encrypted currencies that could be sent peer-to-peer without the need for a central bank.
Just like that, the bedrock of today’s worldwide record-keeping system, blockchain technology and the resultant cryptocurrencies, was born!
As outrageous as the idea sounded back in 2008, only a decade and a third later, it is not a stretch to say that blockchain and cryptocurrency have permeated into our daily lives, playing a pivotal role in making financial trading and transactions more fluid, quick, secure, and convenient. Some foresighted financial experts even believe that the time for crypto-cash to usurp the slow-dying physical cash completely and take centre stage is not far, paving the path for the age of ‘crypto-commerce.’
Today, as organisations keep doubling down their exploration and deployment of blockchain, cryptocurrency, and digital assets to materialise the vision of crypto-commerce, they are stumbling upon another less inquired, albeit crucial aspect of the realm—the taxation of cryptocurrency. The growing crypto economy is widening the ‘tax gap,’ and a major reason behind this is the non-standard transaction reporting across different crypto exchanges coupled with tax authorities’ shortcoming to understand how cryptocurrencies work. But these setbacks are now leading tax authorities around the world to raise the alarm and bolster their regulatory efforts to bridge the tax gap and bring unsolicited crypto trading under check.
The looming question, however, is: how does one understand and address the unforeseen challenges that the decentralised ledger system poses to the rising tax-gap?
Dariusz Kachel, founder and CEO of CoinTracking, has a fitting solution.
Being in the thick of the cryptocurrency bubble right from the start, Kachel realised today’s crypto taxation challenges years back. “I have been involved with cryptocurrencies since 2011. After some trades on different exchanges, I realised that there are no tools to track crypto portfolios and calculate crypto taxes,” he shares. So, Kachel, without wasting any time, put on his thinking hat and saw an opportunity to bring about a radical transformation in the crypto taxation ecosystem. Not long after, in April 2013, he officially launched CoinTracking as the world’s first cryptocurrency tax reporting tool and portfolio manager. “Since then, we have helped almost a million people with their crypto taxes and provided clear reports for different needs, for individuals and businesses,” Kachel shares. Every day, CoinTracking collaborates with CPAs and tax professionals worldwide to collect critical data and create tax reports across many countries, which allows them to remain at the top of all the latest trends in the cryptocurrency industry.
The Bee’s Knees for Cryptocurrency Tracking and Tax Reporting
From the very beginning, the cryptocurrency market has been very dynamic, and with the recent inflation triggered by the COVID-19 pandemic, cryptocurrency has garnered more interest than ever among individuals and businesses searching for an alternative to protect their savings. However, many aren’t fully aware of what cryptocurrency is or how they can make money. Even businesses and traders that are well-versed with the concept face numerous challenges with it comes to tracking coin portfolio, transactions, and profits/losses on different exchanges, missing out on critical information that might enable them to capitalise on the crypto market.
Every day, CoinTracking collaborates with CPAs and tax professionals worldwide to collect critical data and create tax reports across many countries, which allows them to remain at the top of all the latest trends in the cryptocurrency industry
Adding to that mix is the taxation challenge. Emphasising the severity of the situation, Kachel mentions, “More often than not, traders don’t know about the crypto tax regulations and get startled when they have to file taxes for their coin portfolio scattered across different exchanges around the world with diverse-ranging or no transaction data files.” What traders need is a solution that simplifies the trading process by giving them the power to have a complete overview of their cryptocurrency portfolios, analyse their trades, and generate real-time reports on earnings and taxes. Enabling just that is CoinTracking.
All a user has to do is simply import their trading data into the CoinTracking platform via a blockchain address, CSV file, or by integrating an exchange API. Currently, CoinTracking offers more than 110 exchange imports, for centralised or decentralised exchanges such as Coinbase or Uniswap. The challenging task here is the growing Decentralised Finance (DeFi) market, which offers several ways to gain passive income in staking, liquidity providing, lending and more. In addition to that the NFT (Non Fungible Tokens) world is gaining more and more market share and interest by the audience and the exchanges. This is where CoinTracking provides the latest features to cover those topics data and tax wise on their platform. Besides assimilating information, the platform also offers 27 distinct reporting options, which can be further customised to serve a user’s best interests. For instance, Kachel explains, in most countries, traders get a tax discount if they hold their cryptocurrency for over a year, while some other countries offer a total waiver. Here, CoinTracking provides a short and long report that calculates the short-term and long-term assets for a specific date and period to inform users about how long they should wait to save taxes. Imagine having an automated solution that tells you that you can save money without doing anything else. In addition, CoinTracking’s portfolio tracking dashboard and mobile app lets users have a bird’s eye view of the Fiat value corresponding to each of their coins, assets, and commodities like gold and silver. So far, the platform has helped over 930,000 users (including 1250 corporate firms) to track and manage 24.7 billion USD worth in their portfolios.
A Winning Technology that Breeds Success
Today, many corporate clients such as tax firms, trading companies, and fund managers are riding on the coattails of CoinTracking’s competencies to witness positive outcomes.
Making all this possible is CoinTracking’s two-pronged advantage. First, the power of its comprehensive platform that integrates with almost every cryptocurrency exchange in the world. And second is the company’s talented support team that communicates with these exchanges and always keeps their clients well-informed. “We understand that it is very important—especially for new users—to get a solution that is fast. So, when they send us a message, we waste no time in helping them out as soon as possible - on average within 3-4 hours,” says Kachel. “And taking that support one notch higher, we also let new users use the platform free of charge for up to 200 transactions.” We have been fully behind the crypto emergence since the beginning, offering dynamic pricing options, including Bitcoin and 60 other altcoins. Such a customer-centric approach has only enabled the company to forge more trust-based relationships with its clients, which, according to Kachel, is also the force behind his company’s burgeoning success.
With the aim of scripting many similar success stories in its journey, CoinTracking is now laser-focused on familiarising the booming crypto-commerce among more people
This dynamic approach is enabling CoinTracking to lead the way in the crypto taxing realm today, which is best reflected in a client success story. Recently, a US-based individual trader approached CoinTracking with his tax-related troubles, and the company offered him more than just tax reports. The U.S. Internal Revenue Service (IRS) had sent him a notice to pay a little over $1.47 million for the trading he conducted during the previous financial year. The client, however, claimed that the trading record assessed by IRS was inaccurate as it only considered his trades across U.S. exchanges; he had also traded in foreign exchanges in Europe and Asia, which were not accounted for. The client took the assistance of CoinTracking’s full-service team that imported all the trading data from the different exchanges on behalf of the client. The team thoroughly analysed the data and reached a small capital loss for the year, as opposed to the hefty amount he was initially supposed to pay. The client was able to ask for a refund from an initial million-dollar tax bill. Needless to say, CoinTracking helped the client cut the Gordian Knot and bring back their client’s peace of mind. This is only one of the cases where CT Full Service turned hundreds of thousands of dollars in “unpaid” tax bills into an accurate capital gains assessment, saving customers’ money with reliable tax tracking.
" Cryptocurrency is revolutionising how people interact with the global financial system, creating new digital stores of value while reshaping digital ownership "
In another instance, Kachel mentions how his company’s corporate plans have been simplifying the lives of CPAs and tax firm professionals. “Before CoinTracking, they were basically running an Excel spreadsheet, but as every exchange had different CSV files, they had to import everything into Excel manually, look at each transaction value and dates, and convert every single coin into the country’s Fiat currency. This took them a week for one single case.” But now, with CoinTracking, they just import their transactions into the platform and the rest is automated; the platform matches and converts every coin into fiat currency to create a tax report. “What initially took them one week now only needs five minutes, which definitely speaks volumes about our expertise,” adds Kachel proudly.
Illuminating the Path for Crypto-Commerce
With the aim of scripting many similar success stories in its journey, CoinTracking is now laser-focused on familiarising the booming crypto-commerce among more people. Today, backed by their expertise to help clients make the most out of cryptocurrencies, CoinTracking has created a niche for itself. Moving forward, its role in the crypto landscape will become even more pronounced. The company intends to expand its capabilities and grow its full-service team to enable more clients to reap the benefits of crypto-commerce. Cryptocurrency is reshaping the global financial system, while CoinTracking wants to be at the forefront of the revolution. CoinTracking’s CEO envisions a future where every industry accepts crypto payments, from daily to cars or houses. As crypto becomes ubiquitous, the team wants to make it seamless to be compliant and follow regulations while taking advantage of the ease of the crypto ecosystem. In a nutshell, the future of the cryptocurrency market industry is shining bright, and CoinTracking is poised to stay at the helm of all its tracking and taxing requisites.