Crypto Taxes with Chandan Lodha, Co-Founder & President of CoinTracker

In this episode, we cover:Introduction (00:00)Chandan’s background and building CoinTracker (02:26)The tipping point into crypto and tax compliance (06:14)Trials and tribulations of committing to crypto (11:30)Thoughts on expanding into enterprise (14:00)Reflections on recent tax regulation and some expected shifts (18:42)Expanding the relationship with the consumer (21:30)Working in the ecosystems of integrations (24:38)Where CoinTracker is headed (29:00)Links:CoinTracker: https://www.cointracker.io/First tax guidance that the IRS released: https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21More from CoinTrackerFor a 10% discount for new CoinTracker users go to: https://cointracker.io/a/boringInterested in working for CoinTracker? They're hiring across the board: https://www.cointracker.io/aboutTranscriptWill: Welcome to the Perfectly Boring podcast, a show where we talk to the people transforming the world’s most boring industries.Jason: I’m Jason Black, general partner at RRE ventures.Will: And I’m Will Coffield, general partner at Riot Ventures.Jason: And today we’re talking to the co-founder and president of CoinTracker, Chandan Lodha. Chandan is actually a classmate of mine in school and has since built, now, a unicorn business in the crypto tax space called CoinTracker. Not my first time talking to Chandan about the business, but maybe, Will, what were your impressions after our conversation?Will: Yeah, I was really impressed with, I think, the simplicity of the value proposition for CoinTracker. Which is—Jason, as you highlighted in the podcast, it’s sort of death and taxes. And they found a kind of ubiquitous pain point that everybody participating in the crypto space feels around needing to become tax compliant at a certain point, and how they not only solve that problem but then think about it not as the finite value proposition, but as the beginning of what will be a sort of ubiquitous relationship with the consumer, and how to be a partner for them as they go deeper in their crypto portfolio and life.Jason: Yeah. And matching the increasingly complex landscape of crypto with an increasingly, kind of, simplified, approachable version that is within the confines of taxable events, et cetera, that brings that kind of trust all the way back.Will: Yeah, I mean, the landscape of integrations and assets that they have to get their arms around is not static. It is—Jason: It is not.Will: —[laugh] it is not static at all. And just really impressive what they’ve built over a relatively short period of time while also being founded in the midst of a bull market in 2017, building through the course of crypto winter, and now positioning themselves as you know, one of the category-defining platforms as we kind of go into another major building cycle for crypto.Jason: Yeah. Well, before we get too deep, let’s jump into the interview.Will: Welcome to Perfectly Boring. Today, we’re joined by Chandan Lodha who is the president and co-founder of CoinTracker. And today, we’re going to be going on a deep dive into the very esoteric and complex world of taxes as it relates to the explosion in activity that is happening in Web3 and crypto trading. Chandan, thank you for joining us today, and we’d love to start by giving the audience a little bit of a background into your career and how you kind of ended up at this place and building what you’re working on.Chandan: Absolutely. Thanks for having me. So, my background is mostly in the tech space. I was a product manager by training; I worked at Google for a couple of years. And basically ended up getting more interested in FinTech.And so my co-founder and I—my co-founder, John who’s also from Google—basically ended up starting building in the FinTech space. And it was actually building on traditional financial rails, like, automated clearing house ACH and SWIFT network that was super slow, super inefficient, didn’t work in a, kind of, internet-enabled digital way. That led us to be frustrated and diving deeper into the crypto space.Will: Awesome.Jason: And what in particular about the, kind of, tax angle was interesting to you? And give us—I mean, obviously crypto is moving so quickly, has been kind of accelerating, certainly recently, but it’s gone through these waves. It’s kind of important to know what the timing is and where that entry point was. So, maybe you can give us a little bit of sense of timing there, too.Chandan: Right. So, we started working on this in 2017, kind of mid-2017. And what was happening was we were building a personal financial assistant type of app that would help people save money, build wealth, kind of automate financial assistance. And like I was saying, it was really frustrating to work on ACH and SWIFT network. And the reason why is it would take 11 days for our first settlement between a checking and savings account bank transfer, with a $1 fee on a $5 transfer. So, it was slow, it was inefficient, it was expensive, it didn’t work on weekends, it didn’t work on holidays, it was not a 24/7, 365 system.And at around the same time, people were getting super hyped around cryptocurrency, right? This was leading up to one of the biggest bull runs at the time. And so we kind of got curious. We were pretty skeptical at first, to be completely honest, but we kind of dove in a little deeper. Like, what are the fundamentals here behind bitcoin and why is there so much hype here?And what we ended up finding out was, it was a digital-native, global financial system that could be built using this technology. So, that got us, kind of, intrigued from a technological perspective. And next thing you know, I had an Ethereum miner that we built in the office, I was running a Monero full node on my computer, I had 15 different cryptocurrency exchange accounts, it was just super wild. And as a result—Jason: Yeah, it’s immediately going down the rabbit hole in crypto.Chandan: Down the rabbit hole. Exactly. Down the rabbit hole. And as any, sort of, early crypto person can tell you, the next thing you’re trying to do is keep track of all your transactions and wallets and addresses. So, we had a complicated spreadsheet doing that.And then we had formulas pulling in price feeds, and then we had Google Apps Scripts. And it was two minutes to open the Google spreadsheet, so we basically built a very, very simple landing page that only allowed people to track their cryptocurrency portfolio. And it was just—it was a solution for ourselves. We ourselves were like, “We need this.” So, we built that.And we kind of knew we were onto something because immediately random people from around the world, people in Thailand, were emailing us saying, “This sucks and you need more features.” And we were like, “Wow, [laugh]. This random person in Thailand is emailing us complaining that our tool isn’t good enough. That means we’re onto something. W...