As 2022 enters its final month and begins to close, it is time for many new users in the crypto space to begin looking into how they plan to file their taxes for all crypto activity that they engaged in had this year; and while the markets have been horrible for most people in crypto and NFTs, it is still highly important that transactions are filed away appropriately. 

Solana tax reporting live on solana

CoinLedger, a crypto taxation platform, has been working on new ways to help expand their services to people across the world of web3. Their latest development is a smart contract that reads through the entirety of a wallet’s transactions on the Ssolana network after signing. 

This allows for a protocol to quickly summarize a user’s activity during the previous year so that they will be able to accurately report to government entities such as the IRS. 

Web3 Smart accounting

Accounting in the world of cryptocurrency has many pluses and minuses as everything is publicly recorded onto a blockchain, making it easy to keep records of all transactions within web3. 

However, issues lie within the complexity of navigating records on a blockchains because not every cryptocurrency user necessarily understands how to use a block explorer or where exactly to look within a block. 

Fortunately, because - again - the blockchain is public, there is more room to create protocols that can crawl through a blockchain for records associated with individual wallets and display them in a grouping that is appropriate for taxation purposes.  

This method is efficient for users who need to simplify their transactions because activity in web3 is highly-versatile and does not always fall under a single financial umbrella. NFTs, DeFi, and crypto all serve different purposes as products, commodities, and custody, so it is necessary to create smart protocols that can comb through the different types of transactions that someone may have done through a tax year using a single wallet. 

Previous work done by CoinLedger

Since 2018, CoinLedger (formerly known as CryptoTrader.Tax) has been developing new ways to acquire, manage, and display taxable events on a blockchain. They have a highly-qualified and certified team of accountants and attorneys such as Jordan Bass that are capable of accurately piecing together financial documents that adhere to the strict guidelines of the IRS and other governing taxation authorities. 

CoinLedger, recognizes the global significance of web3, and also offers written content about tax laws in various countries besides the United States which is incredibly helpful for the large number of crypto users that reside around the world, especially in Europe and Asia. 

Further, CoinLedger provides portfolio tracking as well so that users can monitor their digital assets from different networks all in one place without having to resort to a centralized exchange instead. 

All together, the fact that accountants and lawyers are teaming up to offer serious financial assistance through smart protocols that can aid in tax reporting, is a huge boon for the industry and will help various blockchain businesses cut through the red tape that has impeded many web3 projects in the past.