In brief
- CoinTracker is crypto tax software.
- The company has a $1.3 billion valuation.
- It's using its $100 million in funding to "scale up the product and company."
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With the IRS filing period just around the corner, one crypto tax company is ready to put its name on a lot of returns.
CoinTracker, a startup that makes crypto investment tracking software, announced today that it has raised $100 million in a Series A round led by Palo Alto-based venture firm Accel. Other investors in the round include Coinbase Ventures, Kraken Ventures, Intuit Ventures (as in TurboTax) and Y Combinator Continuity, the famed Silicon Valley incubator's venture arm.
CoinTracker is software designed to make it easier for crypto users to track their tax liabilities and report earnings and losses to the IRS.
The frequency with which crypto transactions take place, combined with the still-evolving reporting guidelines of the Internal Revenue Service, makes filing taxes difficult for crypto users. As Coin Center's Peter Van Valkenburgh testified before Congress in November 2021, "Existing IRS policy leaves taxpayers uncertain of their obligations with regard to cryptocurrency transactions."
CoinTracker's value proposition is in removing that uncertainty. In addition to keeping score of gains and losses, the tracking software purports to optimize tax strategies to save users money. And it integrates directly with not only major exchanges but also TurboTax.
CoinTracker in unicorn territory
The funding round means the company's valuation soars to $1.3 billion.
It's a big jump from the firm's previous fundraise, a $2 million seed round in 2018, in the dark of Crypto Winter. CoinTracker co-founder and CEO Jon Lerner told Decrypt over email that the company intentionally chose not to pursue funding in the intervening years as it was turning a profit, but that it saw an opportunity to expand as cryptocurrency investing is on the rise and U.S. lawmakers fiddle with IRS reporting requirements.
"Hundreds of millions of crypto users globally need to become tax compliant before there are negative implications like tax audits and penalties," he said.
The funding should give the company more chances to reach investors as it makes the tool available not just to individuals but to tax professionals and international investors as well.
It also plans to keep pace with the growing range of assets (e.g., NFTs) that must be reported to the IRS, as well as the exchanges and platforms that traffic in them. It already boasts direct connections with about 50 such platforms, from Coinbase to Cash App, while users can import CSV data to track transactions from another several hundred additional platforms, among them Uniswap and Lolli.
It's also hiring to keep up with its growth plans, which cover everything from customer support and content to its core products.
Former Uber VP of Engineering Gaurav Garg is coming aboard as head of engineering, while Robinhood Crypto Head of Product Zack Reneau-Wedeen will become CoinTracker's product lead.
Given the cash influx and major plans, Lerner sees this as going beyond a traditional Series A: "While this is a Series A, it is a growth-stage round to scale up the product and company."