Taxbit’s enterprise compliance platform and industry-leading expertise provide tax and accounting solutions that enable global growth.
PayPal is pioneering the integration of digital assets and stablecoins to revolutionize financial transactions, offering secure, efficient, and inclusive solutions that bridge the gap between traditional finance and the evolving digital economy. Taxbit is powering its customer in-app experience, as well as its corporate and information reporting compliance.
PROBLEM
Unleashing In-App Customer Experience & Tax Transparency
PayPal is a leader in customer experience. Their apps are friendly and easy to use. So when they introduced crypto to their platform, that experience was non-negotiable. Also non-negotiable is PayPal’s adherence to regulatory tax compliance.
With the IRS Crypto Broker Regulations still in a stake of flux, and other countries that PayPal operates in do not have information reporting regimes (i.e., UK & Luxembourg), PayPal wanted to ensure that their customers had the necessary tax information available to help them prepare their own personal tax returns. Taxbit assists PayPal in delivering in-app visibility into gain and loss positions, year-end transaction statements, and gain and loss statements.
In PayPal’s first two tax seasons (2021 and 2022), Taxbit issued these essential documents to 4.4 million US cryptocurrency customers and 360,000 in the UK, achieving 100% accuracy.
“Working with Taxbit has been critical to PayPal’s success. Taxbit allows us to further build customer trust on multiple levels by providing ease and reliability in the new realm of digital asset trading, and education and documentation to support their tax obligations. With these contributions, Taxbit is helping PayPal to stay several steps ahead in the rapidly changing global cryptocurrency market.”
Edwin Aoki
Chief Technology Officer of Blockchain, Crypto, and Digital Currencies, PayPal
SOLUTION
Enabling scale-out international growth and streamlining corporate compliance across Tax and Accounting with industry expertise
Following the success of the 2020 launch in the US, PayPal rolled out cryptocurrency trading services in the UK (2021) and Luxembourg (2022). It also debuted its own U.S. dollar stablecoin, PayPal USD, in 2023. Taxbit has readily matched PayPal’s fast pace, supporting more than 15 program and product launches, including PYUSD, as of Q4 2023.
Throughout the non-stop expansion, Taxbit’s enterprise compliance platform has provided a highly reliable and scalable foundation for growth. “Taxbit helped us develop a scalable technical interface that would always be reusable,” Gopinadhan says.
Aoki further articulates how the Taxbit platform can support PayPal’s ambitious plans to extend cryptocurrency trading into other regions, and offer new services such as cross-border merchant payments. “Each successive effort has had a smaller delta on our previous work. Using Taxbit as our platform provider allows us to focus on the differences rather than on re-integrating and revisiting the work we’d done before.”
The value of this accretive, modular approach was apparent when PayPal entered the UK cryptocurrency trading market, which does not have a Form 1099-B equivalent but instead requires a year-end gain/ loss form tailored to UK regulators’ expectations. Taxbit could easily replace HIFO with the pooling accounting method prescribed by UK tax authorities to determine the allowable cost of cryptocurrency assets.
Taxbit’s enterprise compliance platform additionally provides PayPal’s corporate accounting organization with the infrastructure to comply with changing regulatory requirements to report digital assets at fair value. For each cryptocurrency PayPal holds, Taxbit recommends the most accurate principal pricing market and provides real-time pricing data, enabling PayPal to account for unrealized or realized gains. This information is an important part of PayPal’s detailed fair value reporting, which will require changes measured in cryptocurrency assets’ fair value to be recorded through earnings.
Across enterprise tax and accounting, Taxbit’s rules engine powers the capabilities that PayPal and other leading firms rely on to maintain compliance in the rapidly evolving world of digital assets. Its logic incorporates the knowledge and experience of Taxbit’s industry experts and leaders who have been forging tax and accounting best practices in the cryptocurrency realm since its inception. Whether generating statements with 100% accuracy or calculating precise values in real-time, Taxbit’s rules engine is at the heart of the value its solutions deliver.
