Keeping up with cryptocurrency tax compliance can be tricky, especially since many laws are new (or not yet enacted).That’s why Binoculars was founded in. Users integrate their exchanges and wallets, and Binocs provides tax reporting and other accounting details. The startup announced today that it has raised $4 million to expand in markets including the US, UK and Australia. The round was led by BEENEXT and Arkam, with participation from Accel, Saison Capital, Premji Invest, Blume and Better Capital.
Founded in May 2022 by Tonmoy Shingal and Pankaj Garg, Binocs is based in Bengaluru and currently has over 1,000 users, including retail and institutional investors who need 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 over the next month. A portion of the funds will be used for product development and Binocs’ go-to-market team for retail and institutional investors.
Binocs can provide tax reports within 30 minutes. It also tracks investment returns, profit and loss, and capital exchanges, as well as taxes on derivatives, lending, and borrowing across CeFi and DeFi. The app can provide users with details of source-deducted fees and taxes that have been paid in transactions, so they can see how much tax they need to pay.
Binocs founders Tonmoy Shingal and Pankaj Garg
Shingal told TechCrunch that Binocs aims to be the bridge connecting transactions on the blockchain to the “web2-equivalent world of compliance,” especially as the number of coins, exchanges, transaction types and DeFi protocols increase.
Currently there are approximately 300 million crypto usersis expected to reach around 1 billion by the end of this year.
The Binocs founder noted that data from Coin Market Cap shows that the total market capitalization of the crypto industry has risen from around $325 billion in September 2020 to $1 trillion in September 2022. Mixed tax about 20%the total tax liability is about $70 billion, a figure that could increase to $300 billion by 2026.
Crypto hedge and investment funds are often run by a small number of employees, and the process of calculating taxes and enforcing compliance is time-consuming because they have to pull data from multiple sources, combine the data, and then comply, according to the startup’s CEO Shingal. Different compliance and reporting requirements for each transaction.
“The traditional approach is to manually organize and interpret the blockchain transaction ledger. Doing so requires a lot of time, complex knowledge about crypto transactions, local regulations,” Shingal said. “This task is time-consuming, error-prone, and potentially costly.”
Regulation is one of the biggest barriers to greater adoption of cryptocurrencies, with about 15 to 20 countries currently taxing crypto investments, and 60 to 70 in the future, he added.
Binocs also plans to build more applications on top of its algorithm as more data becomes available. “We see ourselves as a data company that understands what’s going on in crypto trading and builds applications for multiple use cases in the future,” Shingal said.
Binocs is not currently generating revenue and will monetize through a freemium model as well as an enterprise program aimed at business investors.
