Essential Infrastructure for Crypto Enterprises, Institutions and DAOs

foreign [Music] well Maha couldn't join as moderator so they just invited me this morning to just speak here so I'm super glad to take this role so my name is Oscar so I'll be your moderator for the day and today we have really great discussion about the infrastructure of course for the victory space when it comes to tax and also regulation for Dao's retail and also of course institutional firms and today I have really great to panelists um first of all I want to introduce antoa scalio he's the CEO of cryptio they are offering tax software audit and also accounting tools for B2B segment and then we have berkin Mingus who is head of marketing from coin tracking they're also offering tax software and solutions but their concentration is b2c so retail all right I think let's start uh before uh we might end a bit sooner this session because everyone wants to eat um so the first question would be from my side is uh what's going on with the text circulation and also environment for retail and also for the institutional side maybe onto our you could start with the B2B segment and what what the institutions are thinking sure thanks for the introduction Oscar um so yeah on the so just maybe a one minute introduction on so crypto is indeed as you said uh back office solution for crypto back office solution for for companies dealing with crypto so we deal with large crypto organizations like uh consensus doing all the back office of metamask um the sandbox and large companies like this but also companies outside this outside the space um we're working with the government of El Salvador working with like one of the largest bank in South America that type of stuff so we're really into the accounting tax audit uh world for like large crypto Enterprise um so yeah to answer your question the um so there's different ways to to see that I I guess that the uh so the tax like tax regimes are pretty clear when it comes to like trading um capital gains um Capital uh gain taxes regimes uh for like you know swap trading and stuff like that it's pretty clear and kind of average jurisdiction um the different things that like are different they are basically rates and how you compute um the capital gains and stuff like that but the regime itself is is pretty clear um even for companies that manage crypto assets uh for for their clients um they have tax reporting obligations they need to report some type of activity to like the the tax authorities um and this also been in the US or soon with Mika in Europe um would be pretty pretty clear when things start to be more complex is on new use cases so when you think about like staking for instance when you think about rewards that you get on Landing protocols here like the uh there is this way more uncertainty on how these things are taxed and um and and yeah and that that creates a lot of complexity um and a lot of optionality which is not only like a bad thing for for these institutions thank you so much Antoine uh but you could start with introduction then with the answer thank you thank you for the introduction and maybe I could just give a quick introduction as well to coin tracking uh coin tracking is uh the first ever portfolio tracker crypto portfolio track as well as a tax reporter um so we've been uh founded in 2012 so there was no other competitor so we had a really good first move Advantage but it was focused on b2c so um it started on its own it grew organically and since to this point we're 10 years 10 years old now and we've been uh developing a lot of things so um which we will get later on as well and um yeah basically you can as a normal user you can just go and create an account then have all the exchanges all the D5 Platforms in forms of wallets as well when it comes to the public Keys imported so the transactions are on your dashboard you have an overview of every investment you ever you've ever made since the blockchain is uh recording everything and uh then you can on the other hand just export your tax report for your financial institution in your country for instance yeah and we're also developing the B2B part of course on trans way far ahead and we're just exploring what kind of possibilities there are to us for us to help and maybe even to navigate in and help the space as well um and when it comes to the tax regulation it's um interesting because in Germany for instance uh where we're based it is uh clearer that's getting clearer but it's still not that clear that people feel safe to do things so a lot of people are still scared of uh trying to invest and of course it's something that is a really important matter when it comes to regulation again which is a really big topic I think in the whole a lot of discussions today and we have drafts which are coming from the Ministry of Finance in Germany and we try to we're also communicating with them and trying to um navigate and even try to educate from from for a b2c perspective as well and the the German space for instance has a lot of um trying uh trying to do to educate those people but it's still it's hard to get that trust into these people because obviously it's uh there are still some loopholes some some problems like nfts or Maneuvers which are not that clear yet and so people are afraid to to start all right um I think it kind of lays down to the transaction side me as a as a user from little side I mean I'm generating quite a lot of transactions I mean how easy is it for me like to track everything and I would say what are the challenges for Enterprises and as well for retail uh what what kind of like we are facing when it comes to monitoring and also tracking all of my transactions when it comes as a company side and when it comes to a user side so maybe uh you could start with the user side and then sure so um the hardest part is to aggregate the data of course so um to have a overview of everything if from b2c side now which you've invested in and then again have the reporting parts to classify all the transactions that have been made and of course there are different uh types of transactions which also uh conclude to a different type of Taxation again so this kind of data is really important and uh to get that data is not that simple sometimes sometimes it's easier and sometimes it's not when it comes to centralized exchanges um this also um something we try to work on with working with different exchanges to have let's say an API connection or a csva data that can be uploaded into our um software so that everything can match us and there's a logical order as the blockchain even does and on chain we get the data from D5 platforms and uh where we just you can put in the public key and everybody can do that as well so that since it's all open and therefore we can extract the data from that but this takes time and there are also new blockchains coming up there are also new trends coming up and we're trying to keep up and it's not that simple since some Trends are not that sustainable they come and they go again so we have to prioritize and that is like the main challenge to have a get all the data aggregated in one point so that the the user himself can uh have the best value and navigate through that space yeah thank you Bergen Antoine yeah on the B2B side so we share obviously we share the same challenges like coverage is a big one uh integration with the with exchanges as maybe some of you know is like a nightmare um but we have like a specific Focus um at crypto which is like Focus like the all clients are mostly doing things on chain uh rather than like trading on on exchanges so the and getting data from the chain especially for large Enterprises that are that are being audited um it's actually more complex than like what people think and is actually more complex that what we thought at the beginning when we when we started so when we started we thought like okay everything is is on a blockchain you have these tools uh called blockchain Explorer like etherscan for instance for ethereum um and everything is there and so let's connect to these tools and do accounting on top of it um but quickly we realized especially with like our first large clients that get that went through the first audit um that these tools were not meant for like the purposes of these Enterprises um and there are a few reasons for that I get like one of them is completeness and accuracy it's kind of a buzzword so to speak in the uh in the audit world like you realize that these tools for lots of technical reasons um the missing transactions the missing movements so you're not able to have like a consistent view of of what's Happening that's the first thing then it's not built for like accounting purpose in mind so they're like missing some key features um that you need to do proper accounting to push data to an Erp system like sap and stuff like that so what we're doing the is not only we take care of like the accounting side of things um but we're also helping these companies like collect all these data at scale from the chain in an auditable way which basically means that like we run nodes for like all the major layer ones and we index all these chains um but again then it comes back to like the challenges the backend mentions which are like coverage and stuff which is when you do things that way it's even more challenged because like setting up these like data infrastructure is something that takes a lot of time awesome thanks for the answer uh when it comes to tax regulations and also adoption how it is impacting the adaption for institutions and also retail and then when continuing with the question like are how we are like facing this harmonization of tax what are the challenges there until maybe you could take um so yeah as I think as I mentioned one of the key problem is mostly on the new um on the new use cases and here you have kind of the problem where like things are moving very fast you have like new use cases new reasons why why companies will want to use digital assets nfts and stuff and and so all these is very difficult for like Regulators to to catch up with things um but I I think that on the on the company's side the most important thing is there's no they you basically need to be surrounded and collaborate on these questions with people that have that are having these discussions on where the tax regulation is going like every day um and so it means that you need to work with like accounting firms that are used to work with crypto clients um these usually these crypto accountants they spend a lot of time with their peers to discuss the new use cases that they're seeing with their clients um it means also working with like people like us because we're working with a bunch of these different accountants and big four and stuff like that um because it's then it's about making choices on things that are not clear where you don't have a tax regime document that and stick to it um and if you do it that way usually you should be you should be good things yes and I agree and what we're currently doing as well is to develop since Contracting is used worldwide as well so we're reaching out to different CPAs and different countries trying to uh get the know-how of okay how should the tax report for instance look like for the the individual customer user and therefore try to evaluate and it's from country to Country it's different our tax expert team is uh evaluating that talking having meetings and this is taking a lot of time as well and again sometimes it's clear sometimes not sometimes there are a lot of room for interpretation and when it comes to new use cases as well it's even more complicated and yeah one step has a clearer path I think this will ease up a lot of things um all right how I can then track all these tax regulations changes uh like from retail side and also from company side like you read our blogs okay that's cool and easy all right we everybody knows here like FDX collapsed everything else uh was pressured by other parties and also from the users and communities and most of the central exchanges was faced facing like trust issues so proof of reserves was one of the ways how Central exchanges could um gain the trust more and when it comes to the big Auditors what happened why they did decline to all the central exchanges what's happening there in this space and what are your so-called thoughts on what alternatives I would say are you guys the best alternative is there or or not so so we don't we don't do audits I'm not sure what's the answer but um what we see and everything everybody um uh considered as well is that it's a very complex topic and a lot of uh firms are backing up because it's uh something you don't want to mess up and since it's that complicated I think the the technique that is used is the Mercury technique currently which is the best or efficient way still it has its flaws or its Effectiveness it's in question but uh this again is something that will hopefully be better in the future but I can't really I don't have a particular expertise to say anything in quality to that yeah so we we're working with a bunch of like a bunch of like audit firms including a lot that far including some of the names that we saw in the in the media recently I think the problem is the um like they mixing different topics right like these so there is like audit of financial statements this is like something that exists since like I don't know like a long time um something that is mandatory that needs to be done by audit firms that are like regulatory regulated bodies um there is like clear rules on how you should do things that's one aspect and then some of these firms um decided to had provide additional Services um to create additional trust and especially following what happened with uh with FTX and this is how this is at this point where like a proof of Reserve um comes in so proof of Reserve is not like a financial statement uh audit and so therefore there's no there's no rules on how you should do this um and um and if it's the problem is that eventually the audit business is like a reputational business right like if your name is linked to like a bad story is linked to FTX or anything like that um obviously the reputation that we'll have on your firm uh will be will be very tough the impact will be very tough even though and because it's the case for these firms that you saw in the media even though you haven't like audited The Entity that creates problem like you haven't audited another entity where everything you have followed the rules and everything like we're fine and you audited the financial statement you approved it and you had given the context that you had you had no reason not to do so but because there is another entity which is not regulated and there's like where the mess is your like firm gets um uh your firm gets like sort of impacted by this um so we saw a lot of like pushback a lot of these firms saying um like we stopped doing audit for clients we stopped working with these clients or some media saying that these firms are stopping doing audit for clients which is not exactly true um they're stopping like the proof of Reserve thing until they found like better ways to do it but they're not really stopping like the financial statement audits because again on that side if they follow the rules like they can't like they did they should be fine um one thing that we saw working with all these firms is that one thing that is clear both on both sides on the proof of Reserve side and and audits of financial statements is that there's a clear lack of like uh tools um they they you know as you may know like Auditors might not be like the more sort of Technology Savvy people um and so when they start to build tool internally you know the tools are not like the best tools that you can find um and so there's a lot of it's very error prone and there is a lot of the the slack of tools create also a lot of problems when you come to auditing these companies so we think that there is a actually a quite big Market opportunity to better serve these Auditors because like it's fine let's be real if if they don't come back if you don't if large crypto organizations can't be audited um it's the end of these companies right like they have to they have to do it it's like it's mandatory so it's a problem that needs to have a solution so we better found a solution thank you so much it was the best dldr that I had so on this topic so so much thanks um all right so when it comes to Dao's uh everybody know what is Adele of course it's a new way how we can incorporate organizations in a decentralized way but how these Downs are actually then combating uh outside challenges in tax regulation accounting uh what what do you say about this Antoine maybe you have the best experience here yeah so we're working with a few like kind of large dials so here it's like it's a total different topic here obviously things are a bit less regulated and there's like a bit more options um the um so there is the topic of like is the Dao itself as like an entity uh should be should be taxed obviously there is no clear answer to that question um we saw some um there's some like framework um that came out in different in places of the world like um sort of legal framework to to set up a Dao for the famous one is in is in Wyoming I'm not an expert of the topics I'm not too sure what's what's the traction there and to be honest I would be surprised that there is like strong traction um but even if there is no like legal entity there is this idea like in the US for instance if like the um the thing that makes like an entity a group of people like taxable is not necessarily like the entity itself it's just if you have a group of people that share resources and are sharing profits this is like a good enough definition um to to tax like the profits and like resources that are in this entity and if you look at this definition obviously like the Dow fits well with this definition um but yeah again I think that we are the like regulators and and um and um yeah and people like that should really focus more on the crypto Enterprise side and let just stuff happen on on the dial side but and the last thing I want to say is if you are an operator in a Dao however like if you do taking income um from those you hear like things on the tax level are very clear if you're getting income you could be being paid by your by a dow is like you need to pay income tax and that's that's very clear thank you so much um from my side it'll be the last question it's of course about the future so how do you see the future opportunities when it comes to the infrastructure of web3 industry and in general for retail and as well for uh the institutions so where can maybe you could start with the retail side so the best possible way and that's what we're working on of course we're trying to educate people so that they know what they're doing and so that they don't afraid anymore of touching anything of these assets or just jumping into this into the into the space of crypto and we're trying to be even more easy to use in form of the infrastructure that it's more automatically done so that they can do less wrong it is as it is currently with the traditional Market as well where you for instance the taxation happens within the within the infrastructure itself or um yeah this kind of I think developments could be really crucial in the part and would help a lot of people as well to start doing thank you Antonio um yeah I think that it's kind of related to everything that we discussed but the um for me like one of the biggest sort of Challenge and things that needs to be like sort of the hot topic of like 2023 onwards um is like data infrastructure um so obviously we're looking at like data infrastructure is not only for accounting and taxes you need data for a lot of stuff um but it's clear that the uh if we've been talking a lot about like trust um and it's clear that the way to rebuild trust is by building like a better data um infrastructure that can provide you know clear um data both for all these different use cases in a very like easily understable uh way because eventually like blockchains are supposed to be like trustless systems so you need to think about like what are the features um that you need in order for these systems to be like truly trustless um and I really believe that having you know strong reliable data infrastructure focused on different use cases is how you you make these these systems like truly uh trustless all right thank you so much Antoine and Birkin now we're going to open up five minutes for the um public auditory to ask questions maybe you have some questions around the infrastructure about those tax or or regulatory for uh for retail so anybody no tax advice Hi how are you I'm Suzanne Tierney I'm a director at deloitte's I work a lot in taxation of cryptocurrencies I have a question for Anton so you said that uh the tax laws are quite straightforward around crypto and digital assets more generally referencing the the capital of goods or sorry the capital gains taxes have you done a lot of work in indirect taxes because generally speaking although the law is quite clear it was drafted in the 70s before even the internet so the first step in order to understand the taxation is you need to review review the use cases of what you're actually delivering to customers and I'd argue that given that there's 90 odd countries in the world with different regimes that it's quite complicated it is no no you do you're totally right like I indirect taxes it's like a bigger it's a huge topic I was mentioning the when I said like it's pretty straightforward it's like for trading I mentioned like the trading use case um so if you buy and sell cryptos and you're making gains on this this is like pretty um straightforward but obviously yeah in I'm not an expert in in direct tax and like the um for instance I give you an example like we working with more than like 300 companies um over the world and like there is for none of them you know they have a good way and we don't even provide a good way either to track or then like to declare everything related to indirect tax so it's like a big big um sort of blurry area where indeed you you're right there is a lot of work to do cool can I ask you one more question on the dials sure yeah of course yes we have three minutes left so please yeah just because I agree with you that that is very unclear and I'm wondering in terms of what you're seeing if anybody's challenging the taxation of a dios are they looking through to the individual token holders or would they look through to the people governing the Dow if there's a difference you mean if you have like authorities that are going after the the doubt yeah exactly control or is it the tokens themselves so I'm not too sure of this but I don't think we have a lot of examples so far of that happening um in the sense that they're more going after Kraken an FTX and all the large like crypto Enterprise than the small found the Taos some of the towers are large but like eventually compared to these companies they're they're small um the but the what we saw for instance is the um like someone before like um mentioning the uh the example of tornado cash um in that specific example um they went to the like the most active contributors um who actually happened to be one of the largest token holders of the dial um so they I think they thinking is like who are the individuals even if it's decentralized like let's be a real usually you have like large token holders um and given that everything is public um based on that example and based also on how I think should happen um they will look at who are the largest token holders we usually sometimes are the largest like contributors like developers and stuff and they will go after these individuals because if you don't have an entity even if you haven't even if you have an entity in Wyoming like I'm not too sure where you should like talk to in order like to to attack this entity um and and yeah the contributors are or or kind of public facing even though it could be like Anonymous but the public facing and all the data is is there so I think that would be that would be if it's not an advice I don't want that to happen now but that would be the way to go thanks very much thank you as well for the question anybody else wants to ask yeah please hey Kayla commission issued a call for evidence for those and they had a question whether we deem dials should be recognized as a new legal entity I wanted to ask you whether you want more countries to recognize something like that and whether you're familiar with the model of udas made by koala cool um no I think um I think there's a lot of fun it's very very experimental I think that was a very very experimental um I think there is for lots of different reasons there's like problems of like traction um and when space or like technology or type of organization is that early um with still like lots of open questions like existential questions on how these things should work on what is the infrastructure that should be used uh what are like the best practice in terms of governance it's definitely not the time to say okay like this is like how you should do things this is like there's this little Entity framework that you should use um I think that we are way way too early to be too not to be able because as you're saying like like sort of regulators asking the questions but the um I think that it would be um it would be uh it would be a chiffon it would be bad that like these type of regulations enter like in the in the near future and it would be the same thing for and then I will have I will say the exact same thing for D5 for instance Let The Innovation happen thank you so much for the question the time is up unfortunately but if you want to speak more uh Antoine will be about B2B and Birkin will be about the retail side so thank you all for participating in this discussion and see you soon enjoy the lunch [Applause]