On January 6, 2020, TaxBit, a Utah-based company that offers crypto tax automation software for crypto users, exchanges, and traders, raised $5m in seed funding to improve the performance of its innovative cryptocurrency tax platform.

According to news reports, the platform would help crypto investors in the US to comply with the country’s tax regulations.

This comes after the Internal Revenue Service (IRS) prompted US citizens via a 1040 form last year to indicate whether or not they have conducted any crypto-related transactions.

The inquiry brought several thoughts to mind, as many believed that the tax agency is planning on levying taxes on crypto-related transactions in the future.

Pointing out the significance of the new development, TaxBit CEO and co-founder, Austin Woodward stated that cryptocurrencies are too prevalent to be ignored by relevant tax authorities as more users keep showing interest in digital assets.

He commented:

“In such a highly regulated space with so many complexities, TaxBit is needed to remove the burden of proper cryptocurrency tax reporting from the shoulders of crypto users, exchanges, and merchants.”

Eliminating the complexity of crypto tax reporting is integral to accelerating cryptocurrency adoption, as more regulators would be more willing to embrace digital currencies.

Automating Cryptocurrency Tax Filing

According to Woodward, TaxBit is trying to eliminate this confusion with its tax solution, by integrating a user’s digital wallet or crypto exchange account to the platform. This approach is projected to automate the reporting process by pulling the necessary data and completing the required tax reports on behalf of users.

Since its launch last year, the platform has helped crypto investors with tax obligations as well as develop enterprise products for crypto-related firms, exchanges, and merchants.

The announcement also detailed that the $5 million will be utilized to enhance the software of the tax-calculating platform and in the firm’s global expansion.

Apart from targeting US customers, the Utah-based enterprise is also preparing to extend its reach to Canada, the UK, and Australia.

Is Crypto Tax Compliance the Future of Cryptocurrencies?

As the crypto industry gets bigger in terms of revenue, nations are looking for ways to generate revenue from the sector, which has led to several nations proposing bills to tax cryptocurrency transactions.

While part of the appeal of crypto is its decentralized nature, regulation is a real issue that can affect users. Therefore it does seem that a program such as TaxBit is needed in today’s world and could even be a benefit to professional tax preparers who are still getting up to speed on cryptocurrency compliance.

