Against the backdrop of the United States Senate attempting to pass a now-$1 trillion infrastructure bill with a controversial clause about cryptocurrency tax reporting, crypto tax software and accounting startup ZenLedger announced today that it has raised $6 million in a new Series A funding round.
Billionaire investor, Dallas Mavericks owner, and NFT enthusiast Mark Cuban is among the new investors in ZenLedger’s round via his Radical Ventures firm, adding to a long list of crypto industry companies that he has helped fund in recent months. Cuban has also invested in crypto firms such as Axie Infinity game maker Sky Mavis, NFT social network and marketplace Nifty’s, and Ethereum scaling solution Polygon.
ZenLedger’s platform aims to simplify cryptocurrency tax reporting for individuals and businesses alike, with the ability to plug into popular exchanges, track transactions, and automatically output various tax forms. It’s not the only crypto tax-centric software firm in the space, however: rival services include TaxBit, which counts Gemini’s Winklevoss twins as investors, as well as CoinTracker and Accointing.
Founded in 2017, ZenLedger intends to use this latest funding round to launch a dashboard that integrates crypto portfolio tracking and tax details into one regularly-updated destination. The startup has now raised a total of $11.5 million in funding to date. ZenLedger claims to have boosted its customer base and revenue by more than 500% apiece on a year-over-year basis, with some $5 billion worth of crypto transactions processed to date.
Bloccelerate VC led this latest Series A funding round. Along with Cuban’s Radical Ventures, new investors G1 VC, Borderless Capital, 4RC, Centrality, BIGG Digital Assets, and CoinGecko participated in the round, as well as new angel investors Jon Staenberg and Darren Lau. Previous investors Vestigo Ventures, Castle Island Ventures, Migration Capital, Blackwater Capital, and Karl Muth all recommitted with this latest round.
The United States government has gradually stepped up its enforcement of crypto tax reporting in recent years. The Internal Revenue Service (IRS) sent warning letters to more than 10,000 crypto users in 2019 and 2020, and added a prominent question about cryptocurrency usage to its 1040 form for the 2020 tax year.
Congress aims to generate as much as $28 billion for its infrastructure bill by expanding the definition of a crypto broker for tax purposes, but crypto industry advocates claim that it will increase financial surveillance. Critics also allege that the language—which was tweaked and refined over the weekend—is currently too vague and could affect network participants who cannot feasibly comply with increased reporting demands, such as cryptocurrency miners and transaction validators for proof-of-stake blockchain networks.
The Electronic Frontier Foundation (EFF) has criticized the bill, and crypto think tank Coin Center and other industry representatives are working with US Senators to amend the bill before it potentially passes and is sent on to the House of Representatives.
