Tax Season

VeradiVerdict - Issue #133

April 22, 2021

Tax season is upon us and the new federal tax deadline is May 17. It’s an extremely busy time for everyone in the cryptocurrency industry right now but one of the most common questions I am getting right now is how are folks doing their crypto taxes?

With DeFi summer happening last year, many people made quite a bit of money yield farming and thus tax platforms have to be able to ingest ethereum addresses and integrate with these different decentralized finance protocols. First helpful tip is that you should link not only your ethereum addresses but all of your past centralized exchange accounts so that your cost-basis becomes more accurate.

I’ve used three different crypto tax software providers in the past and figured I’d share some quick thoughts on each, in no particular order, in case it’s helpful:

  1. TaxBit

    1. The company just raised a massive $100m fundraising round so they should be well-capitalized

    2. User interface is a bit more old-school enterprise and the load times are laggy

    3. The tool itself seems to do a fairly good job on tracking though you’ll probably still need to go through your past transactions and verify cost-basis

    4. The portfolio view nor tax optimizer were helpful to me

    5. Great responsive customer service

    6. Pricing ranges from $50/year to $500/year based on number of transactions

  2. CoinTracker

    1. The company came out of Y Combinator and raised a small $1.5m seed round a few years ago

    2. User interface is very sleek and silicon-valley, probably the best of the three tools

    3. The dashboard is quite comprehensive and the portfolio section gives you deeper analytics on your positions, both similar to popular DeFi tools like Zapper and Zerion, standing out from the competition which are mostly just tax tools

    4. The tax tool was the most inaccurate of the three but customer service was solid

    5. Tax plans range from $0 to $399/year based on number of transactions and you can subscribed to a portfolio assistant to help you manage your portfolio and do tax loss harvesting for $99/month

  3. TokenTax

    1. The company is bootstrapped and has not raised any funds

    2. The user interface is probably right in between the other two products and down the fairway

    3. The tax tool was about on par with TaxBit in terms of accuracy, maybe a tad bit more accurate

    4. Tax plans range from $65/year to $799/year with the VIP service costing $2,500/year and includes advanced reconciliation

- Paul V

DIGESTS

Our columnist compares how the company behind the leading stablecoin (USDT) attests to its reserves and how its competitors do it.

The launch of the FORTH governance token is an important step for the project’s path toward decentralization. 

NEWS

Macro fund manager Brevan Howard plans to invest up to 1.5% of its main fund in cryptocurrencies, according to a story in Bloomberg.

For now, Venmo is allowing customers to trade in just four types of cryptocurrency: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Users will also have the ability to share their cryptocurrency purchases on the Venmo feed.

REGULATIONS

The Eliminate Barriers to Innovation Act of 2021 seeks to establish a digital asset working group with representatives from the SEC and CFTC.

The Wall Street Journal reported the news on Tuesday, saying Brooks will join the crypto exchange on May 1.

IN THE TWEETS

NEW PRODUCTS AND HOT DEALS

Back in December last year Injective Protocol launched the testnet for its DeFi protocols for cross-chain derivatives trading, with backing from giant crypto exchange Binance.

An array of crypto industry investors led by a16z has backed the $28 million funding round for Aleo, a platform designed to support decentralized, private applications.

LETS MEET UP

Bitcoin 2021, Miami, June 4-5

ABOUT ME

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.