David Kemmerer on Getting Your Crypto Taxes Done in Minutes with CryptoTrader.Tax (Episode 112)
Today David Kemmerer with CryptoTrader.Tax joins us to discuss how to get your crypto taxes done in minutes.
David is the Co-Founder and CEO of CryptoTrader.Tax, the leading online tax reporting platform for the growing cryptocurrency market.
The Traders Guide to Cryptocurrency Taxes:
https://cryptotrader.tax/blog/the-traders-guide-to-cryptocurrency-taxes
Featured articles:
*Disclaimer. None of this information is financial advice.
The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:01:04:22 – 00:01:28:28
Richard Carthon: Hello everyone and welcome to another episode of Crypto Current. Your host here, Richard Carthon, and today I got a very special guest. We’ve got David Kemmerer all the way out in Minnesota right now, but technically lives in Austin where I am, so we are definitely going to connect after all of this Covid stuff is done with. And very excited to learn more about his amazing company and project that he has CryptoTrader.Tax. David how are you doing today?
00:01:29:21 – 00:01:43:23
David Kemmerer: No, I’m doing good, yeah. Not in Austin right now just because I’ve been back up in Minnesota, which is where I’m originally from for a while seeing some friends while all the craziness goes on, but I’ll be back, so we’ll definitely have to connect. And thanks for having me on.
00:01:43:25 – 00:01:58:21
Richard Carthon: Of course. Well definitely excited to learn more about what you have going on and I mean, it’s very well needed, especially with everything that’s going on and people not really knowing what to do. But before we dive into your company, tell us a little bit about yourself. Give us some background.
00:01:58:23 – 00:02:46:12
David Kemmerer: Sure. Yeah, so background about me. I grew up like I said in Minneapolis, Minnesota, went to school at Wisconsin, studied finance marketing over there and then have always kind of had the entrepreneurial bug if you will, which I think you see often with founders. You know, I’ve always had the side hustles and stuff and started a couple of companies before CryptoTrader.Tax. But you know, in 2017, when the cryptocurrency and Bitcoin wave really hit that first time and you know, it seemed to be everywhere, that’s when I really got interested in the space and started thinking you know, I mean, I was seeing the wave of adoption that just so many who were coming in the space, I was like, “Hey what can I build to service these people?” Right?
00:02:46:14 – 00:02:46:29
Richard Carthon: Right.
00:02:47:01 – 00:02:55:20
David Kemmerer: I don’t want to try to get rich mining you know, gold, but I want to be selling the jeans and the pickaxes to the people.
00:02:55:22 – 00:02:56:07
Richard Carthon: 100%
00:02:56:09 – 00:03:26:15
David Kemmerer: So myself and my two partners actually ran into the tax reporting problem that exists and really it’s just it gets hard to report your capital gains and capital losses on trades, especially if you have any sort of high volume. And so we decided, “Hey tax reporting software it’s you know, that Gene’s pickaxe tool that a lot of people are going to need. Let’s build an idea around that.” And so that’s how we got started. It’s a little bit about my background I guess, but I’m a sales and marketing guy, so I’m not a developer.
00:03:26:17 – 00:03:40:24
Richard Carthon: Nah, nothing wrong with that. And we’re well needed in this world, trust me. We make the world go round for sure, but I know that you said around 2017 is when you started paying attention, but did you have any earlier interactions with it? Like what was your first introduction into the space?
00:03:41:12 – 00:03:47:02
David Kemmerer: Yeah. So the first time I heard about Bitcoin was when a group of my friends were using it to buy fake IDs in college.
00:03:48:25 – 00:03:49:10
Richard Carthon: No way
00:03:49:12 – 00:03:54:02
David Kemmerer: And I mean I didn’t know what it was back then, but I just remember that’s what we were having to use to do that.
00:03:54:04 – 00:03:57:18
Richard Carthon: Do you remember what year that was?
00:03:59:12 – 00:04:03:07
David Kemmerer: So that would have been 2013.
00:04:03:12 – 00:04:04:14
Richard Carthon: All right, and it’s pretty early.
00:04:04:16 – 00:04:06:12
David Kemmerer: Yeah.
00:04:06:14 – 00:04:06:29
Richard Carthon: Awesome.
00:04:07:01 – 00:04:32:09
David Kemmerer: Yeah, 2013. But like I said, I didn’t really actually do anything or learn anything about it, right? I just knew about it, right? I could have told you what Bitcoin was back then, but then you know, with the wave of 2017 and Bitcoin going on, 20 grand and everyone thinking you know, “This is how we’re gonna get rich.” Yeah, then I really paid way more attention to it and actually went down the rabbit hole of learning about Ethereum, everything going on in this space. And that was really interesting to me.
00:04:33:06 – 00:04:53:05
Richard Carthon: For sure. So you know, 2017 of course you have the wave that rides up and then of course we’ve seen a decline and now back up, it’s been an entire wave. And so y’all come together, you and your co-founders, you make CryptoTrader.Tax. Tell us about what that is. And how are people beginning to utilize it?
00:04:54:03 – 00:05:03:25
David Kemmerer: Yeah, yeah, I know the name’s a mouthful. Like I was talking to you before, my co-founder, Lucas, came up with that name really before I was really on board.
00:05:03:27 – 00:05:04:27
Richard Carthon: Yeah.
00:05:04:29 – 00:05:13:04
David Kemmerer: And we just stuck with it, so CryptoTrader.Tax, it’s a mouthful. Now remind me again, sorry, the question was kinda how did it get going?
00:05:13:07 – 00:05:18:06
Richard Carthon: Yeah, so give me your origin story like you know, where’d the concept come from and then how do you get it out there?
00:05:18:21 – 00:05:50:02
David Kemmerer: So like I said, so in 2017, I was fascinated by the space, saw just a thousand, literally thousands of people like coming into this ecosystem, so that perks my ears up from like a business development type thing. It’s like, “Ok, there’s definitely tools that can service all of these people who are coming into this space, right?” And so to start just learning the space I actually and my brother started building market making bots on finance. And so what these are, right market making strategy is really you’re just trying to trade the spread of these assets, right?
00:05:50:05 – 00:05:50:20
Richard Carthon: Right.
00:05:51:08 – 00:06:28:06
David Kemmerer: If I’m tryna get five percent as this volatility happens and so we are trying to build software out to, you know, automate these trading strategies for us and back then there was no software really off the shelf to do this. Right now, like it’s like there’s so many tools that can automate you know, you’re trading for you. And so this points to again that there is this opportunity to build infrastructure and these tools for these traders and all these people getting into space. Anyways, in doing that market making stuff, you know, we racked up thousands of trades and once tax season rolled around, I somehow found out that crypto to crypto trades were considered a taxable event.
00:06:28:08 – 00:06:28:23
Richard Carthon: Oh man.
00:06:28:25 – 00:06:43:03
David Kemmerer: And so what that means is that you just need to be calculating your capital gain or loss for every transaction. And here’s the kicker, in U.S. dollar terms, right? And as you know, on these exchanges nothing’s quoted in USD, right?
00:06:43:06 – 00:06:43:21
Richard Carthon: No.
00:06:43:23 – 00:06:45:13
David Kemmerer: Everything’s quoted in another cryptocurrency.
00:06:45:15 – 00:06:46:24
Richard Carthon: Everything’s a pair.
00:06:47:07 – 00:07:33:26
David Kemmerer: Exactly. And so yeah, I mean and me then I was like, “Oh we have this huge reporting problem, like there’s no way we’re gonna be legally reporting this. How am I supposed to go back for thousands of trades and calculate each one of these?” And so that’s what made me aware of the problem. Flash forward a couple months later, I actually met both of my co-founders, Lucs and Mitchell, who at the time were trying to start cryptocurrency tax software and because I had the problem like, “Oh that’s a great idea, we could automate this whole thing by just essentially having a database of all the historical prices of every crypto ever.” And then the database, right? For you just pull those prices so that it immediately calculates your gains and losses kind of automatically. So that’s how it got going and then we were just heads down to the races after that.
00:07:34:10 – 00:08:04:10
Richard Carthon: Yeah. And I mean a very smart and crucial point that a lot of people I don’t think, and this holds true, especially well for traders in the space. You know, you don’t really realize how many transactions that you’re doing all the time and then to be able to get your cost basis to be able to understand like where each of those were without doing the pair, it’s I mean, I ran into a couple of people who like sat down with an accountant for months just trying to map all of that out and spinning out a lot of money just to cover cover their butt, right?
00:08:04:20 – 00:08:28:10
David Kemmerer: Yeah. And then it gets even worse if you’re on multiple exchanges because then you’re transferring coins and then the exchanges history isn’t even enough for you to sell or through it right now, you have to start tryna combine both of your trade histories from your multiple exchanges and wallets and whatnot and it gets to be like I mean, you just cannot do it if you have high volume trades without software, like you can’t.
00:08:29:13 – 00:08:41:10
Richard Carthon: Right, absolutely. So you fast forward, y’all have been able to build out this product. Tell us about some of your users. Like who’s your ideal user? Who’s this for? How have they been able to use it? Give us some information on that.
00:08:41:24 – 00:09:22:15
David Kemmerer: Yeah, so like the ideal user is like a trader, right? Someone who does have some type of volume of trades, right? If you just have like one or two, it’s not a problem to like calculate the gain or loss on you know, when you sold your one Bitcoin that you bought. But for the folks who have you know, anything above like 20 even is getting to be a lot to do by hand. And so our target persona is someone who’s actively in the cryptocurrency space, right? They’re trading on multiple exchanges and they want to be reporting their taxes, right? We’re not trying to go and crusade and be like, “Hey pay your taxes.” The people who want to be staying in line with the law, they find us.
00:09:22:17 – 00:09:23:02
Richard Carthon: Right.
00:09:23:04 – 00:09:29:03
David Kemmerer: And so to date, we have over you know, 30,000 people around the globe who calculate their taxes.
00:09:29:06 – 00:09:34:05
Richard Carthon: That’s awesome, so this is for international as well? So any and everyone can come and utilize this resource?
00:09:34:26 – 00:10:16:12
David Kemmerer: Yeah exactly, and to an extent right? So our platform supports any fiat currency, so you can go and calculate your gain or loss in any fiat currency, you know, British pound, Australian dollar, U.S. dollar, euro, whatever it is, but we really cater to the U.S., in terms of we auto populate pre like your tax forms that you actually need for like the IRS here and we’re rolling that part of it out to multiple countries. But in the sense of like just doing gains and losses calculations, we support any fiat currency. In taking a step further in supporting the specific forms and whatnot that are required by the specific governments, right now, we support the United States, Australia and we’re quickly rolling out to Canada and the UK.
00:10:16:23 – 00:10:39:11
Richard Carthon: That’s awesome. That’s powerful, man. So like with building all this you know, this has basically been a three year journey, you’ve been through the ups and downs. And I mean, regardless whether the market’s gone up or down, people are going to have to have their taxes, like that’s going to be consistent forever. You know, how has it been like building this company through the rollercoaster that it has been, the market for the last several years, how has that journey been?
00:10:40:09 – 00:10:46:15
David Kemmerer: Yeah, I mean it’s hard, right? Like just I mean, plain out, you know it, like building on it, it’s really hard, right?
00:10:46:24 – 00:10:47:09
Richard Carthon: Yeah.
00:10:47:11 – 00:11:00:02
David Kemmerer: And the people who have grit and can just roll with the punches are going to win in the long term, right? Because if you can just stay in the game for the longest period possible, good things are going to come.
00:11:00:04 – 00:11:00:19
Richard Carthon: Yes.
00:11:00:21 – 00:11:14:01
David Kemmerer: I guess that’s like my one piece of advice. But in terms of like how’s it been, like you said, it’s been good because we are removed from the ups and downs of crypto cause like you said, you know, our marketing just changes depending on what’s going on the market.
00:11:14:03 – 00:11:14:18
Richard Carthon: Right.
00:11:14:20 – 00:11:27:28
David Kemmerer: If the market’s down, we say, “Hey you can write off all your losses on your taxes, just do your taxes with us.” And if the market’s up it’s like, “Hey good job, you made a ton of money. Now cover your ass and make sure you’re in good graces with the IRS just file your taxes, right?”
00:11:28:12 – 00:11:29:01
Richard Carthon: Right.
00:11:29:09 – 00:11:37:21
David Kemmerer: And so our marketing flip flops depending on what’s going on the market. But yeah, whatever the market’s doing, we’re still growing because of that.
00:11:37:23 – 00:11:52:23
Richard Carthon: Awesome. Well I mean, I’m sure you’ve been able to meet all kinds of people within this and you know, being in a space for the last three years you’ve seen all kinds of incredible projects that are going on in the crypto, blockchain space. What are some that have your attention right now that you’re watching?
00:11:54:16 – 00:12:11:23
David Kemmerer: Yeah, so we do get kind of a bird’s eye view because right, tens of thousands of people import all of their transaction history across every type of platform, right? We support exchanges, wallets, you know, DeFi platforms, everything right? And so we get to see what’s popular in the moment.
00:12:11:25 – 00:12:12:10
Richard Carthon: Right
00:12:12:12 – 00:12:28:20
David Kemmerer: And right now I mean, the world of lending, margin trading, anything to do with interest, right? Which all ties into the fueled margin trading is blowing up right now. So like companies that I’m watching closely like Blockfire, right? Everyone knows them, it seems like.
00:12:28:22 – 00:12:29:07
Richard Carthon: Right.
00:12:29:09 – 00:12:33:25
David Kemmerer: But they’re doing such a good job. I just read an article that they might be going to IPO here.
00:12:33:27 – 00:12:34:12
Richard Carthon: Wow.
00:12:34:14 – 00:12:36:27
David Kemmerer: Like by the end of the year, which is crazy.
00:12:36:29 – 00:12:39:24
Richard Carthon: We actually had one of the co-founders on here, Flori, come on the show.
00:12:39:26 – 00:13:04:29
David Kemmerer: Oh did you? Yeah, I heard she’s awesome. I know their Head of Marketing and I’ve spoken to Zach before but yeah, awesome company. So anything in that space, right? Where they’re like, replicating the bank almost, just a billion crypto, right? Interest accounts you know, lending, that’s just growing so fast and fueled by the people who want to be trading on margin, right?
00:13:05:01 – 00:13:05:16
Richard Carthon: Yeah.
00:13:05:18 – 00:13:27:20
David Kemmerer: So as more and more derivative cryptocurrency exchanges like you know, Bybit, Terabit, you know, Bitmax, all these margin products cracking has the big margin exchange. As more and more people want to use that, the lending markets have to develop because if you’re shorting, right? You have to give the asset to the person.
00:13:28:27 – 00:13:29:12
Richard Carthon: Right.
00:13:29:14 – 00:13:50:17
David Kemmerer: Right, cause you’re selling it. And so as we see more and more margin exchanges and just the demand for that to continue to rise, on the flip side, the amount of interest you can make lending your crypto continues to grow. And so, that’s why we’re seeing BlockFi Celsius, all this DeFi world just goes crazy and it’s fueled by this margin.
00:13:50:19 – 00:15:04:13
Richard Carthon: And that’s awesome and I mean I think that’s a really great point of just saying like the circle of how everything kind of fuels itself and fuels each other. And it’s a very cohesive marketplace where you’re seeing a lot of businesses kind of feed on top of each other and just creating this ecosystem, which is also opening the door to institutional money eventually going to enter the space, which then I think is the first inception point into mass adoption because I believe as more money enters the space, you’re going to see more and more people wanting to get in. So I mean even those with PayPal getting ready to try to find a way to get crypto involved. So this means anyone who has Venmo, now you can potentially start buying crypto, like that’s huge. I mean, the fact that you even have things, social media, like TikTok, and like they’re all saying you know, so again everyone listening, you know, this already, but this is not financial advice, we’re not going to tell you what to get X, Y, Z, but there was of course, this whole explosion of Dogecoin out of nowhere and all because it was trending on TikTok and the next thing you know, you see it skyrocket. Now it’s skyrocketing back down, but like, the whole point being that as more and more people are paying attention to this space, there’s just so much opportunity for people to get involved. Yeah go ahead.
00:15:04:15 – 00:15:23:06
David Kemmerer: Yeah. I love your point about how like the ecosystem fuels itself cause you’re exactly right, like as this margin stuff gets more and more popular, we naturally get more and more popular cause people need to be reporting the interest income on those loans that they’re getting, right? And then as that happens, right, just more and more infrastructure gets built out.
00:15:23:15 – 00:15:24:00
Richard Carthon: Right.
00:15:24:02 – 00:15:41:15
David Kemmerer: As this mechanism continues to work. And so yeah, like to your question you know, how has it been through the ups and downs, that’s another thing, like I’m not someone who like is a gung ho, like crypto is going to be the future, like I’m still like, very much like I don’t know. I’m going to be here for the ride.
00:15:41:20 – 00:15:42:05
Richard Carthon: Yeah.
00:15:42:07 – 00:16:10:00
David Kemmerer: But seeing stuff like that, right? Where you see the ecosystem just continue to evolve, that does make me very bullish on the space. Still the question is what’s going to be like the killer use case of crypto because what’s fueled it to this point is really like you have to be honest, it is just speculation and there’s nothing wrong with that, right? It’s fine that you know, that got it really far, but at some point it’s going to have to evolve into more use cases. And so I’m excited for that, like it’ll be interesting to see where it goes.
00:16:10:23 – 00:16:13:24
Richard Carthon: Absolutely. And ah, there’s just so much opportunity in this space.
00:16:13:26 – 00:16:14:11
David Kemmerer: Yeah.
00:16:14:13 – 00:16:35:09
Richard Carthon: And on those lines, I mean 2020 has been an absolutely interesting year to say the least. A lot has happened that has put crypto more into the spotlight than what I think it would have gotten probably in the next five years. What are some things on the either immediate to like, near future that you think people should be paying attention to in this space?
00:16:36:08 – 00:16:57:21
David Kemmerer: Yeah, yeah, like I said, I really think pay attention to the lending space and everything that ties to that, right? Kind of like we’re getting, it all ties together, right? It’s the margin, the derivative products, they all need is lending. And so I mean, I’m watching that closely. We’ll be building products to support all of those platforms.
00:16:57:27 – 00:16:58:14
Richard Carthon: Right.
00:16:58:16 – 00:17:27:19
David Kemmerer: What else is interesting? I mean, I think the Ethereum concept is very interesting, right? So I’m watching what the vitality and the team are doing with I think it’s right the Ethereum 2.0 and just getting scalability on the Ethereum platform to enable more apps to be developed, decentralized, right? And we’re seeing it, it’s doing well, but you do just constantly see and you hear that people are limited just with the amount of throughput that can happen.
00:17:27:21 – 00:17:28:06
Richard Carthon: Right.
00:17:28:08 – 00:17:44:19
David Kemmerer: With blockchain, so scalability at the blockchain level, right? Is going to be important for just like new concepts to be able to be built out. Yeah I mean, you could talk about this subject for a long time, right? I know you’re excited about this space.
00:17:44:25 – 00:17:45:10
Richard Carthon: Yeah.
00:17:45:12 – 00:17:48:01
David Kemmerer: I’m also excited about Paypal, Venmo coming in, like so good for us.
00:17:48:07 – 00:17:48:22
Richard Carthon: Yeah.
00:17:48:24 – 00:17:55:02
David Kemmerer: Just the more easy access to it that people have. I mean the better it is for us because more people are encurring taxable events.
00:17:55:07 – 00:17:56:02
Richard Carthon: Definitely.
00:17:56:10 – 00:18:07:21
David Kemmerer: At some point they’ll have to do their taxes. But yeah, like I’m very bullish in crypto in general. Do I know which coin is gonna go up.? No, but like the space.
00:18:08:02 – 00:19:00:08
Richard Carthon: No. The space, yes, absolutely. And I mean, going back to the scalability, that’s one of the things I try to draw from the people is that when you think about like what made, I make a lot of correlations between cryptocurrency and the Internet and in the first phase of the Internet when nobody was paying attention like, “Oh this thing,” people were building the infrastructure, people were building the groundwork and right now we’re still seeing that done. And the scalability is one of the biggest issues in blockchain right now, but it will be solved, it will be fixed and whoever cracks that nut and I think Ethereum has the best chance at this moment to crack that nut and then as soon it’s cracked and people have like the solution of here’s how you do it, people are going to take that playbook and make it so much better and then it’s just going to keep building on top of itself and just keep getting better and better and better. So like I think that is going to be the secret sauce to like, really help explosion happen in this space.
00:19:00:23 – 00:19:07:17
David Kemmerer: Yeah, no, I completely agree. I think it’s so fascinating drawing the comparisons to the Internet, right? You hear that a lot and it’s so relevant.
00:19:08:06 – 00:19:08:21
Richard Carthon: Yeah.
00:19:08:23 – 00:19:35:02
David Kemmerer: Because things do take time, right? And you know, in the modern day, like the communication channels that we have, through social and just everything, like you see it way faster. And so people are like, “Well, why isn’t it happening quickly?” It’s like, well you forget that the Internet took you know, a decade to reach mass consumer adoption, right? And they were building infrastructure for a long, long time. They were literally laying cables to like, get the Internet to people’s houses and whatnot.
00:19:35:05 – 00:19:35:20
Richard Carthon: Right.
00:19:35:28 – 00:19:41:10
David Kemmerer: And so I think that you can draw parallels to the space, right, like a lot.
00:19:42:06 – 00:20:01:22
Richard Carthon: Definitely. Well you have given us a lot to think about between everything from the loaning space to of course doing your taxes with CryptoTrader.Tax. Yes I got the name right and it’s starting to flow a little bit better. And you dropped a lot of great knowledge on us. What is a final thought that you want to leave with all of our listeners here today?
00:20:04:14 – 00:20:43:03
David Kemmerer: Final thought, yeah, so I’m guessing that your audience is obviously very crypto focused. I’m guessing they’re also probably fairly entrepreneurial and that’s that’s the bucket that I fall into a lot, right? So final thought is there’s so much opportunity in this space, if you’re interested you know, stake your land now because like there’s no better time to build in this space, whether it’s producing content, whether it’s you know, educating people, whether it’s creating your own product or service in the space. You know, these frontier markets is always a great place to go build because there’s always so many problems, so many new things happening so fast that there’s just so many companies that can be built.
00:20:43:05 – 00:20:43:20
Richard Carthon: Right.
00:20:43:22 – 00:20:55:13
David Kemmerer: And so, that’s the final thought, right? If you’re interested in starting a company or just doing some type of side hustle, I do think this is one of the best industries to do it in because there’s so many problems that need to be solved.
00:20:56:00 – 00:21:04:15
Richard Carthon: Absolutely and I definitely appreciate that final thought. I also want to drive home that there’s just so much opportunity in this space, that even if you don’t want to create your own thing, there are jobs in this space right now.
00:21:04:29 – 00:21:05:28
David Kemmerer: Yeah.
00:21:06:00 – 00:21:40:03
Richard Carthon: There are a lot of people who are growing quickly, are raising money and like, are building, they’re trying to find great quality talent in this niche space and a lot of people aren’t necessarily paying attention to it. So basically you could come and join a company that’s working on a great thing, have a really good opportunity and grow in that space as well. So definitely want to cosign and say, “Hey this is a great space to be in.” Don’t wait, just dive on. Find something that you’re interested in and just just go for it. I really do appreciate that final thought, but David, what are some ways that people can connect with you and learn more about you and learn more about your company?
00:21:40:25 – 00:22:02:29
David Kemmerer: Yeah, yeah. The easiest way is just to go to CryptoTrader.Tax, so, not .com, but .tax. You know, everything’s available there. We have live chat support agents all time. If you have any tax questions, we’re happy to answer them for free. But if you want to just connect with me you know, Twitter just @David I think _Kemmerer is what it is is the second best way, but I’m pretty easy to get hold of.
00:22:03:21 – 00:22:08:13
Richard Carthon: Awesome. Well again, really appreciate you and appreciate your time. And for everyone listening, Stay Crypto Current.
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