Tracking cryptocurrency tax compliance can be difficult, especially since many laws are new (or not yet written). This is why Binocs was founded. Users integrate their transactions and wallets, and Binocs provides tax reporting and other accounting details. The startup announced today that it has raised $4 million to expand into markets such as the United States, United Kingdom and Australia. The round was led by BEENEXT and Arkham with participation from Accel, Saison Capital, Premji Invest, Blume and Better Capital.
Founded in May 2022 by Tonmoy Shingal and Pankaj Garg and based in Bangalore, Binox currently has over 1,000 users, including retail and institutional investors who need to perform forensic accounting and risk management. Binocs is currently tax compliant in the US, UK, Australia, South Africa and India, with plans to add more markets next month. A portion of the funding will be used for product development and Binox’s go-to-market teams for retail and institutional investors.
Binocs can provide a tax report in less than 30 minutes. It also monitors investment, profit and loss and capital exchanges, as well as derivatives taxes, lending and borrowing on CeFi and DeFi. The application can provide details about the charges and taxes deducted on the prepaid transactions so that the users can understand how much they have to pay for the transactions.
Binox founders Tonmoy Shingal and Pankaj Garg
Shingal told TechCrunch that Binox is intended to be a bridge between transactions on the blockchain to the “web2 equivalent compliance world,” specifically the increasing number of coins, exchanges, business types, and DeFi protocols.
There are currently around 300 million Crypto users, and that is expected to hit around 1 billion by the end of this year.
Binox founders point to figures from Coin Market Cap showing the total market cap of the crypto industry has grown from $325 billion in September 2020 to $1 trillion in September 2020. Combined tax at about 20%, total tax liability. It is about 70 billion dollars and this number can grow to 300 billion dollars by 2026.
The startup’s CEO Shingal said that crypto hedges and investment funds are often run by a few employees and the process of calculating taxes and enforcing compliance is time-consuming because they have to extract, integrate and then follow data from multiple sources. Different compliance and reporting rules for each type of transaction.
“The traditional approach is to manually collect and interpret blockchain exchange ledgers. Doing so requires significant time, sophisticated knowledge of crypto transactions, local regulations,” Shingal said. “This task is time-consuming and error-prone, which is costly.”
He added that regulations are one of the biggest obstacles to further adoption of crypto, with about 15 to 20 countries that currently tax crypto investments, and 60 to 70 that will be in the future.
Binocs also plans to build more applications on top of the algorithm as it acquires more data. “We think of ourselves as a data company that will understand what’s going on in crypto transactions and build applications that will be used in the future,” Shingal said.
Binocs is currently pre-revenue, and generates revenue through a freemium model as well as an enterprise plan for business investors.
