Given that cryptocurrency as a financial asset has existed for only about a decade, it may not be surprising to learn that formalization is one of the biggest stumbling blocks for traders who have embraced the industry.
“The most difficult part in the entire market is that there is no standard,” said Dennis Wohlfarth co-founder and COO of the cryptocurrency tracking and tax platform Accointing. “For example, every exchange uses different API connections, they use different standards for the fees. It’s insane how they create their outputs sometimes.”
In a recent interview with Benzinga, Wohlfarth detailed just how disjointed the bookkeeping around cryptocurrency remains and how that lack of order led to the creation of Accointing’s free tracking platform, as well as it’s optimized crypto accounting capabilities.
Prior to launching Accointing, co-founders Wohlfarth and Yann Allemann were simply early cryptocurrency traders themselves.
“We invested in different coins, we had different wallets, we were on like 10 different exchanges,” said Wohlfarth. “There was not really a good product that let you track everything in real-time and store all of your transactions in order to create reports to analyze your data, analyze your investments, look into your performance in general.”
Wohlfarth and Allemann set to building their own software to order their cryptocurrency transactions. However, as the logic of the system progressed, the two co-founders bumped into another area of disarray in their digital assets, namely their tax liability in the new asset. Because of the myriad exchanges involved in the totality of their transactions, coupled with the lack of clear tax guidance, getting a consistent record of their accounts was always a monumental undertaking.
“We had to create our tax reports for Switzerland and for Germany. We ended up doing all of that manually in excel files with our CPAs in a process that took us around three months because we had to download all of the transaction histories, we had to put together all of the data and we couldn’t really do that in a scalable way.”
From there, Wohlfarth and Allemann continued to elaborate on Accointing’s accounting abilities while still offering the tracking side of the platform for free, so at the very least they had a venue for consistent information regarding their crypto accounts.
Beyond simply collating exchange transactions for yearly taxes, Wohlfarth and Allemann attempted to make Accointing a crypto-tax optimizer, one that could also be tailored to each user’s preferences and country of residence.
“Because there’s no final regulation for any country, we decided to build our reporting in a way that the user can always change the regulations,” said Wohlfarth. “So we allow users to select how they want to report airdrops, we allow them to select how they want to report and tax margin gains and margin trades and all of these different things that come up.”
This customizability led to the platform’s optimizer capabilities, which Wohlfarth explains, “allows users to select the coin, give us a quantity and we tell them which coins to sell from which [exchange] based on the tax outputs that the trade generates.”
Currently, Accointing’s tax software is optimized for Austria, Germany, Switzerland, and the U.S. However, Wohlfarth and Allemann are looking to expand into all the major crypto markets, including Australia and the U.K. in the near future.
Accointing is a content partner of Benzinga. This story originally appeared on Benzinga.com.
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