How Binocs Promises To Help Keep Crypto Investors Out Of Trouble

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Investors have had years to get used to account­ing for tax on tra­di­tion­al asset class­es such as equi­ties and bonds. But the soar­ing pop­u­lar­i­ty of cryp­tocur­ren­cies and relat­ed assets brings new chal­lenges for both retail and pro­fes­sion­al investors. Enter Binocs, a fin­tech start-up that is today announc­ing the suc­cess­ful com­ple­tion of a $4 mil­lion seed fundrais­ing as it launch­es a tax and com­pli­ance solu­tion for cryp­to investors.

The focus of reg­u­la­to­ry and tax author­i­ties on cryp­to is grow­ing world­wide, argues Ton­moy Shin­gal, CEO and co-founder of Binocs. “We’ve already seen more than 20 coun­tries make changes to tax and reg­u­la­tion in response to cryp­to and I expect anoth­er 50 to do the same over the next few years,” Shin­gal says. “This is some­thing investors are going to have to man­age very carefully.”

The prob­lem for investors – in both the retail and the insti­tu­tion­al space – is that track­ing cryp­to requires dif­fer­ent skills and tech­nolo­gies to those deployed in the admin­is­tra­tion of oth­er asset class­es. In par­tic­u­lar, the data on trans­ac­tions is held in blockchain ledgers that can be dif­fi­cult to access and deci­pher for those unfa­mil­iar with how the sys­tems work.

Binocs believes its tech­nol­o­gy pro­vides a solu­tion to this issue. Investors plug their cryp­to accounts into Binocs’ app and it pulls in a read-only view of the under­ly­ing data in order to pro­duce the reports required for tax and com­pli­ance pur­pos­es. The app can be used to track mul­ti­ple cryp­to accounts simul­ta­ne­ous­ly, which also makes it a con­ve­nient way for investors to get a uni­fied view of their hold­ings and positions.

“Tax and com­pli­ance firms are try­ing to man­u­al­ly build solu­tions to do this sort of work,” adds Shin­gal. “But it’s dif­fi­cult – you need to be able to read the ledgers and to be able to inter­pret poten­tial­ly thou­sands of data points to iden­ti­fy rel­e­vant trans­ac­tions and the exact nature of them.”

The chal­lenge for Binocs is to ensure the out­puts from its tools fit the needs of investors in the coun­try where they pay tax and must man­age com­pli­ance, even though sys­tems vary from one coun­try to anoth­er. So far, Binocs is tax com­pli­ant in the US, the UK, Aus­tralia, South Africa and India, though it expects to launch in oth­er major mar­kets in the next few months.

The tar­get audi­ence is a glob­al one – and grow­ing fast. The total mar­ket cap­i­tal­i­sa­tion of the cryp­to sec­tor has increased from $325 bil­lion two years ago to more than $1 tril­lion today. More than 300 investors glob­al­ly now hold some form of cryp­to asset and the num­ber is expect­ed to dou­ble by 2025.

So far, Binocs has focused on build­ing out and test­ing its tools, work­ing pri­mar­i­ly with around 2,000 retail investors to fine-tune its prod­uct. They’ve been giv­en the tool for free, but Binocs is about to start charg­ing, with tiered lev­els of ser­vice depend­ing on investors’ trans­ac­tion vol­umes and the func­tion­al­i­ty they require. Those tiers start at $49 a year and then increase, with Binocs promis­ing insti­tu­tion­al investors a more bespoke pric­ing mod­el, built around their indi­vid­ual usage.

Shin­gal believes that Binocs can not only ensure exist­ing cryp­to investors stay on top of their tax and com­pli­ance work, but that it can also help new investors become more com­fort­able with the asset class. “There is huge inter­est in cryp­to, but it feels very com­plex to some investors,” he says. “We’re try­ing to make it as sim­ple as possible.”

Indeed, Binoc says its app will be able to com­pute most investors’ tax lia­bil­i­ties in less than 30 min­utes. And for investors run­ning mul­ti­ple accounts, the abil­i­ty to access uni­fied port­fo­lio mon­i­tor­ing, as well as a con­sol­i­dat­ed account of their tax posi­tions, could prove very valuable.

The next step for Binocs is to prove that investors will pay for its ser­vice in large num­bers. Shin­gal says today’s seed finance round will help in this regard, giv­ing the busi­ness addi­tion­al fire­pow­er to invest in its prod­ucts, as well resources to put into go-to-mar­ket initiatives.

The $4 mil­lion round is led by BEENEXT and Arkam, with par­tic­i­pa­tion from Accel, Sai­son Cap­i­tal, Pre­mji Invest, Blume and Bet­ter Cap­i­tal. “Cryp­to native organ­i­sa­tions will need solu­tions such as Binocs to help them with their com­pli­ance, account­ing and book­keep­ing,” says Anirudh Garg, an investor at BEENEXT. “This is a great mar­ket oppor­tu­ni­ty to build an easy-to-use, yet pow­er­ful, sys­tem ear­ly on.”

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