Cryptocurrency trades have reached record numbers this year with 80 million transactions executed globally during the market crash on 13th – 14th March 2020.
These days dipping in and out of cryptocurrency is easier than ever, but as governments slowly catch up with the tax affairs of crypto traders, it may be time to look at the books again.
Enter Recap, a UK startup and first of its kind cryptocurrency accounting platform that puts privacy at its core. Users can calculate a tax report in minutes by connecting multiple exchange accounts to the platform, but uniquely they retain full custody of their data. Recap founder Daniel Howitt explained,
‘Cryptocurrency is a new market and with that comes a lack of basic protections; privacy is very often the only recourse you have in securing your cryptocurrency. Privacy IS security.’
The zero-knowledge model is timely, given the growth of sophisticated and targeted financial crime. Recap’s approach to data stays close to the principles of decentralized finance and avoids the ‘honeypot’ effect that attracts bad actors to the crypto industry.
Tax reports simplified.
Recap solves a number of complexities for the cryptocurrency user, including portfolio tracking across multiple exchanges. Consider that on average, a cryptocurrency user will have somewhere in the region 2,500 transactions spread across 4 different exchange platforms. Helpfully, Recap will draw together all trades across exchanges and wallets to show the entire cryptocurrency journey in one place.
The platform has been carefully created in collaboration with tax advisors and accountants in the UK and US. Daniel explained that very often, cryptocurrency users from both jurisdictions are not aware of what to account for.
‘One of the biggest misconceptions is that only crypto to fiat transactions are taxable when in fact exchanging crypto to crypto is a taxable event.’
This is perhaps unsurprising for early crypto adopters who received scant guidance from both HMRC & the IRS. Happily, though, it is possible to amend returns retrospectively to get the house in order, should a notice to audit ever come through your door.
What’s next? Following its recent launch into the US, the Recap team is now turning its attention on derivative platforms. The first integration expected soon with Kraken future’s crypto facilities whose UK license has just been renewed.
Learn more about Recap here