Seattle-based cryptocurrency tax analysis firm ZenLedger has raised $3.35 million in a seed round after processing more than $1 billion crypto transactions. ZenLedger’s investors include Vestigo Venture, Castle Island Ventures, Gumi Cryptos, Unblock Ventures (Line Messenger), and Migration Capital.
Following the release of the first cryptocurrency tax guideline by the Internal Revenue Service (IRS) in five years in early October, the agency has ramped up efforts to verify the compliance of cryptocurrency investors with federal taxation policies regarding the emerging asset class. The IRS said:
“The IRS is aware that some taxpayers with virtual currency transactions may have failed to report income and pay the resulting tax or did not report their transactions properly. The IRS is actively addressing potential non-compliance in this area through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.”
Despite the perception of ambiguity surrounding cryptocurrency taxation policies, it has become significantly more important for investors to comply with existing regulations and the requirements of the IRS, creating demand for analytics companies.
More crypto investors are trying to be compliant
In an interview, ZenLedger CEO Pat Larsen told CryptoSlate that the noticeable increase in the number of investors relying on tax analysis firms like ZenLedger demonstrates that the IRS and SEC are moving towards stricter enforcement and that investors are trying to remain compliant. Larsen said:
“I know a lot of smart people are working on a lot of interesting projects in blockchain and crypto. I think the rapid growth in the number of investors using ZenLedger is a reflection of the fact that the IRS and SEC are stepping up enforcement. I also think that there are just a lot more people investing in crypto as a speculative asset that they hope appreciates in value (denominated in USD gains).”
While regulated cryptocurrency exchanges…