Crypto tax reporting was a contentious topic in the U.S. last year as Congress passed the Infrastructure Investment and Jobs Act.
Cryptocurrency portfolio tracker and tax calculator CoinTracker has attained “unicorn” status after raising $100 million in Series A financing, demonstrating once again that investors are allocating vast sums of capital toward crypto-focused companies.
The Series A investment round was led by California-based venture capital firm Accel, with additional participation from General Catalyst, Initialized Capital, Y Combinator Continuity, 776 Ventures, Coinbase Ventures, Intuit Ventures and Kraken Ventures. Individual investors who participated in the round included former Stripe COO Hughes Johnson, Coinbase board member Gokul Rajaram and Jeremy Liew, an early investor in Affirm and Snapchat.
With the capital raise, CoinTracker’s total valuation grew to $1.3 billion, making it the latest unicorn to be crowned in the crypto industry. In the startup world, unicorns are companies that have attained a valuation of at least $1 billion.
CoinTracker said it will use the funds to meet the growing demand for complex tax reporting tools within the crypto industry. It will also expand its human resources and broaden its coverage of exchanges, chains and wallets. The company says it has over 500,000 users and tracks over $20 billion worth of crypto assets across 25 blockchains and over 300 exchanges. Its user count has grown fivefold since April 2020 when it first amassed 100,000 users.
The new US infrastructure bill has been signed by President Biden. The bill imposed restrictions on businesses handling cryptocurrencies and mandated digital asset transactions worth more than $10,000 shall be reported to the IRS. https://t.co/gxdeK2LVJa
— Cointelegraph (@Cointelegraph) November 16, 2021
When asked about the biggest issues crypto holders face with respect to tax compliance, CoinTracker co-founder and CEO Jon Lerner told Cointelegraph that keeping track of transactions across multiple exchanges leads to challenges calculating taxes accurately. “Complexity is exploding,” he said, explaining:
“Calculating that capital gain or loss can be difficult, especially considering it could have been acquired from a variety of places and transferred across exchanges and wallets over time. To make matters worse, users are increasingly using cryptocurrency across more exchanges, decentralized tools, and chains, as well as use cases like store of value, DeFi, NFTs, payments, and more. Complexity is exploding.”
As Cointelegraph reported, CoinTracker’s platform became available to users of Coinbase, one of the world’s leading digital asset exchanges, in January 2021, which was right around the time that the Internal Revenue Service (IRS) was calling on the exchange to take a stronger position on tax evasion. CoinTracker’s platform enables users to report the transaction and sale of thousands of cryptocurrencies in a more accessible way.
Crypto was once again in the crosshairs of the IRS and federal regulators with the passing of the Infrastructure Investment and Jobs Act in November 2021. The new law is expected to generate $28 billion in tax revenue from the crypto industry over the next ten years due to changes in how regulators classify brokers, as well as other reporting requirements.
Related: Crypto heavyweights back inflation-resistant savings protocol
Regarding venture capital’s continued interest in the crypto space amid the recent market downtrend, Lerner said that “most of the top tier technology investors have recognized that the cryptocurrency industry is here to stay, given its enormous potential and upside.” These investors don’t let volatility impact their investment decisions because they focus on companies with strong fundamentals.
