A Pioneering Solution for Missing Cost Basis – Addressing One of Crypto's Biggest Challenges
TaxBit’s Cost Basis Interchange makes accurate transfer matching and cost basis information between digital asset brokers (and non-brokers), protocols, and individuals accessible.
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TLDR: TaxBit is solving one of crypto’s most challenging problems: missing cost basis. Knowing cost basis (the original purchase price) of an asset is critical for filing taxes, but can be exceptionally difficult to track across the crypto-ecosystem. To make tax reporting more accurate across the industry, TaxBit’s new solution provides accurate transfer matching and portability of cost-basis information between brokers and non-brokers, in addition to supporting decentralized and smart contract protocols.
The complexity of tracking the cost basis, or initial acquisition price, of Bitcoin or any other digital asset across multiple exchanges, wallets, and protocols is an enormous burden. When cost basis is not accounted for correctly, individuals have historically been left with inaccurate or incomplete data when filing their taxes. Enterprises are often flooded with frustrated customers (who they are often unable to help), because there has been no industry-wide solution for the issue of cost basis sharing – until now.
In the world of traditional equities, cost basis information is largely a solved problem. Traditional equity brokers are required by law to share cost basis information in order to make tax reporting easier for individuals. Imminent legislation outlined in the Infrastructure Investment and Jobs Act (IIJA) will soon require digital asset brokers to do the same, but with much greater complexity. Under the IIJA, digital asset brokers will be required to exchange cost-basis information on a broker-to-broker level and require an entirely new transfer of cost-basis to the IRS in the broker-to-non-broker context (i.e. any off-platform wallet address).
Cost Basis Interchange is a pioneering, industry-first solution to address the compliance and reporting challenges facing cryptocurrency and digital assets. Founding CBI partners include Binance.US, FTX US, Gemini, Paxos, ZeroHash, BlockFi, PrimeTrust, Okcoin, Uphold, Coinme, CoinList, Ledn, and other leading platforms.
TaxBit’s Cost Basis Interchange is a critical step in the evolution of cryptocurrency as a new asset class. Cost Basis Interchange is an accurate, automated solution to eliminate missing cost basis data gaps for all transfers within a single, industry-standard data model and API. As Jasmine Lee the CFO of Binance.US, another leading exchange, clarified:
“At Binance.US, we operate with a compliance-first mindset. As the digital asset industry continues to evolve and more regulation is introduced, it is important to ensure we have the right tools and processes in place so that our customers can continue their financial journey effortlessly. We look forward to partnering with TaxBit on a seamless and automated solution for the compliance and reporting challenges the industry faces.”
With Cost Basis Interchange, TaxBit enables a compliant ecosystem for sharing cost basis information between digital asset brokers, in addition to providing IRS Transfer Statements for all non-broker wallet addresses. This novel solution makes it exceptionally easy for exchanges to classify broker and non-broker wallet addresses in order to stay aligned with ever-evolving regulatory requirements. In advance of our launch, TaxBit’s CEO Austin Woodward noted:
"With the launch of CBI, digital asset brokers now have a forward-looking solution to address not only compliance needs but also one of the industry’s largest user experience challenges - missing cost basis. CBI is one seamless API that makes cost basis interoperable.”
