Bitcoin’s price surge has left many in the general public fearing they missed out on a big money-making moment in cryptocurrency.
But for those who have been buying and trading across various exchanges for a while, there is a different fear: How to deal with crypto come tax time.
Requirements for reporting cryptocurrency assets have been the topic of much debate as exchanges like Coinbase, Binance, and Kraken become more mainstream. As the SEC and IRS update tax requirements for virtual currencies, individuals and businesses working with cryptocurrencies have needed to find ways to accurately assess capital gains and losses.
Sloane Brakeville, a founding member of IBM’s Blockchain Labs, had been working with cryptocurrencies in both his personal and professional life before connecting with family-friend and CPA Elizabeth Dodge about tax implications for his transactions.
“When Sloane brought all of his transactions to me, my knee-jerk reaction was to use a traditional accounting program to help him aggregate the data,” Dodge told Hypepotamus. “But it was impossible because all accounting software only goes to two decimals.”
Dodge also knew that working within Excel or other standard spreadsheets wouldn’t cut it, as there was a growing need to process thousands of cryptocurrency transactions a minute.
Between Brakeville’s technical background and Dodge’s accounting experience, the two started working on the idea for Computis, a B2B tax software for digital assets, back in 2018. After officially launching in 2019, the team has grown to include engineers and blockchain experts from across Atlanta and the country. Taylor Hawley, an engineer at Ford and a Georgia Tech graduate, has joined as the Chief Product Officer.
As an API-focused software, Computis uses “specific identification” to improve the process of working with large amounts of crypto transactions.
The software is leveraged by businesses that need to provide Form 8949 (for capital gains and losses), standard investor forms, and portfolio balance reports to clients.
“Why not offer these documents to people at the source of all of these transactions? The same way they would expect their Robinhood or Vanguard accounts to give them tax documents at the end of the year,” said Brakeville.
As SEC and IRS requirements continue to transform to the growing number of crypto-related exchanges, the team behind Computis believes that they can offer an essential service to those looking to streamline and find all of their tax information.
“Because [crypto] is growing so fast, the business accounts we are looking at are needing to scale their operations to provide investors [tax] information, and we’re the only one that has an API connection for them,” said Dodge.
LOOKING AT THE FUTURE OF CRYPTO
Atlanta appears to be fertile ground for crypto-related startups, including BitPay and FinTech unicorn Bakkt.
Computis believes its API-first approach to cryptocurrency taxes will play an important role in streamlining tax paperwork, and ultimately organize transactions, transfers, and other important data across various wallets and exchanges.
To date, Computis has taken $150,000, with BlockScience as its lead investor.
The team told Hypepotamus that they will likely raise a seed round in the future as the team looks to scale.
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Photo by Pierre Borthiry on Unsplash
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