S1E9 - Sukesh Tedla | Kryptoskatt

🎙️ New Podcast Episode Alert! 🎙️

Join us in the latest episode of "From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets," presented by CryptoCFOs. This time, Taylor Zork, CPA/MBA has a fascinating conversation with Sukesh Tedla, the CEO, and Founder of Kryptoskatt.

In this informative discussion, Tedla unravels the intricacies of DeFi, NFT market, and crypto taxation, sharing crucial advice to help you understand and manage digital assets better.

Key takeaways from the episode:
🔹 Navigating the Challenges in DeFi and NFT Market: Understand the complexities of a crowded market, and learn how to handle issues with balances, token prices, and calculations.
🔹 Sukesh Tedla's Unique Platform: Discover Kryptoskatt's commitment to user experience, featuring automatic wallet detection for multiple EVM chains, expansive DeFi and NFT dashboards, and support for multiple jurisdictions.
🔹 Crypto Ambitions and Expansion: Gain insights into Kryptoskatt's ambitious expansion plans and their mission to support accountants in various jurisdictions, with a toolset for all types of users.
🔹 Importance of Managing Crypto Taxes: Learn about the significance of being proactive with your crypto taxes, the need for efficient tools to assist in this process, and the implications of non-compliance with tax regulations.

This episode is a treasure trove of knowledge for anyone invested in the digital assets space. Tune in to enhance your understanding of crypto taxation and gain a firm grasp on managing your crypto assets!

Visit www.cryptocfos.com to join the community!

Creators & Guests

Host

Taylor Zork

Co-founder CryptoCFOs | Host "From Niche to Necessity" Podcast

Producer

Brandon "Bova" Santiago

Helping finance pros build and grow their practice in the $5B tax / accounting Web3 space.

Producer

Brian Whalen CPA

Here for #TaxTwitter. Cannabis & #CryptoTax for fun, Blaise’s Dad, Veteran of Nuclear Navy, #CPA firm owner, Cannabis Landlord

Producer

CryptoCFOs

Teaching you to navigate the complex and evolving DeFi and crypto landscape to level up your tax or accounting practice.

Guest

Sukesh Tedla

Entrepreneur | Blockchain & Crypto Pioneer | CEO & Founder of Kryptoskatt | Member of Telos Core Team | Chairman of Swedish Blockchain Association

What is From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets?

"From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" is your source for expert insights on the rapidly evolving world of crypto and digital assets. Hosted by Taylor Zork, CPA, and presented by CryptoCFOs, this interview-based podcast delves into the complexities of tax and accounting for Web3 and digital assets. Tune in as Taylor sits down with top finance professionals, and CEOs of Web3 organizations to explore the latest developments and best practices in this exciting field. Whether you're a seasoned finance professional or simply curious about the future of digital assets, this podcast will keep you informed and engaged. Subscribe now to stay ahead of the curve and unlock the potential of Web3 and digital assets in tax and accounting!

Sukesh Tedla [00:00:09]:

Hello and welcome to Niche Necessity. My name is Taylor Zork. And today we have a very special guest. We have Sukesh. He is from Kryptoskatt. He is the CEO and founder of CryptoScat, which is a crypto tax and accounting software. Their aim is to make the process of doing that stuff simpler. So welcome Sukesh.

Taylor Zork, CPA [00:00:31]:

Yeah, thanks for having me Taylor.

Sukesh Tedla [00:00:33]:

Great to be here. Yeah, so we've had a few different good discussions in the past. We've done a Twitter live stream as well. And so I appreciate you coming on, but I'd love to just start by kind of informing our audience a little bit about, you know, your background and kind of how you got into crypto.

Taylor Zork, CPA [00:00:54]:

Yeah, sure. So I have a background in, I come from a technology background, but I have a master's in telecommunications. Originally, I did my master's back in 2014, I finished my graduate from master's or started my master's. And then I started working at Ericsson before I came into the blockchain space. I was working in 1 of their data center departments working on 5G technology. So I have very hands-on experience like building data center servers, infrastructure setups. So that kind of really got me into like the blockchain technology, like how it operates, how the servers communicate and everything, because it's the distributed server. So that was really curious for me. That got me into the blockchain space. And I first got to know about blockchain cryptocurrencies back in early 2017, I would say. So I was mainly just interested in the technology. I did do some investments, but it wasn't that much. I was mainly interested and intrigued by the technology and what it offers. And soon after, by the end of 2017, I co-founded Swedish Blockchain Association, which is like a nonprofit organization in Sweden, just to create a platform and ecosystem where people can come and talk freely about blockchain because in that time in 2017, like there were literally a hundred people talking about blockchain in Sweden. So I was like looking at these all communities globally, there were like tons of people talking, but like in Sweden, it was super small. So we wanted to create this awareness and create a platform where people can come and talk. So that was my first initiative. And later on, like in 2018, I co-founded a layer 1 blockchain network called Telos which is an EVM protocol now and which is currently I think like around 60 million in TVL or market cap actually and it's peak at its peak it was like 300 million last year in 2022. Uh yeah but uh I also worked at like companies like Volvo cars working as a blockchain and innovation consultant uh during 2018. I was working under the vice president team, focused on like the vision of how blockchain can disrupt the automotive industry, looking at 5, 10 years ahead in time, coming up with the ideas that can affect a billion people or which can generate a billion dollars in revenue. That was my job description pretty much, which was a fun experience. I worked there for 8 months. And during 2020, I kind of got full time into the blockchain space. Like COVID hit, I stopped doing all the other stuff that I was doing. It was just like, okay, I want to do completely blockchain and went full time into the blockchain space. But throughout my journey, like I had the infrastructure businesses, I was working with the Telos network, build that network, ground up with a lot of others. And then also like the Swedish Blockchain Association and everything. But 1 of the biggest challenges I personally had was to do taxes and accounting because you're getting a lot of tokens as a payment for different services that you're doing. But like when it comes to the basic stuff when it comes to accounting and taxes, taxes are quite heavy in Sweden. But so I was trying to get some help either by reading by myself or like trying to talk with different accountants and spoke with a ton of people within Sweden and also outside of Sweden during that time. And we ended up working with a big 1 of the big 4 companies, Grand Fountain. Like even then, like at every single time, like I had to explain myself what this is, what is blockchain, what is cryptocurrency, how are these transactions done. It's still too complex today, like working with them for the last 3 years, it's still like, they don't understand what is DeFi, what is NFTs and all these things. So it just got to me like, okay, I had to do something where at least I can at least personally have something to help myself to do my own taxes because I had like thousand transactions or something in 2020 that I had to report myself. So that kind of all started my journey with CryptoScat. And I co-founded, I founded it, I funded it till date, pretty much bootstrapped the whole company with the other projects that I was working on. And we were like 2 people back in 2020 and now we are more than 25 people within the team. We grew exponentially during 2022. We launched our first beta in early 2022. And by the end of 2022, we launched our alpha web application mobile app so people can take advantage of their portfolios and taxes within a unified platform. And also, on the go, you can check your portfolio in real time on the mobile app as well. So that's kind of like our journey so far.

Sukesh Tedla [00:06:15]:

Cool, Yeah. So you answered my second question, which is like, you know, what led you to create it? It sounds like it was kind of like your own personal struggles with the industry and identifying a problem. That's cool. So are you the sole founder? Do you have a co-founder, did you say?

Taylor Zork, CPA [00:06:32]:

I do have a co-founder, my CTO, who is based off India. He was 1 of the very first person to join the team and yeah, believe in the idea and work with me. Very cool.

Sukesh Tedla [00:06:46]:

So what do you see as the biggest challenges that investors have to overcome with regards to taxes?

Taylor Zork, CPA [00:06:54]:

I think the biggest challenge is, first of all, like the lack of awareness for most people that they have to pay taxes on crypto. It's kind of like magic internet money, right? So a lot of people think they don't have to pay taxes. So like creating that educational awareness is like so challenging already today. And oftentimes like the accounting terminologies and like the information surrounding it is always like sounds gibberish to a normal person. So conveying that in a more easy way and understandable way is the challenging part. And on top of that, like, there are so many different intricate details about transactions, different types of scenarios, and how those things are handled from a tax perspective, even like the governments and the tax offices themselves oftentimes are not aware of these things. So like, yeah, bridging that gap between both sides is the challenging part today. And that's creating a lot of issues for investors and people who are holding cryptocurrencies. And that makes them think like, okay, I just don't wanna deal with it and spend a lot of time right now. I'll just pay the fine or whatever. If I'm making too much money, I'll just pay the fine. Right. So that's what more people are inclined towards. And last year, there was a report in Sweden that more than 300, 000 people were trading cryptocurrencies just on the Swedish trading platforms with the data that's available, but only 2, 000 people reported crypto taxes. The tax authorities are aware about this, but they can't do anything because It's hard to track. And then once it's outside an exchange, what do you do? How do you even track it? They don't have the tool set today to track this, essentially.

Sukesh Tedla [00:08:57]:

Yeah, I mean, I think I hear a lot of misconceptions around what's reportable as well. I hear a lot of people talking about like, oh, I only pay taxes when I cash it out to Fiat or something like that. And so, specifically in the US, that's just not the case. And so, any of your DeFi swaps or things like that are gonna all be taxable. And I think, you know, I hear a lot of people saying like, okay, why would I report to the IRS? Like, you know, the IRS is a super inefficient agency. Like if I can't figure this out, how are they gonna ever figure this out? And I mean, my response to that is that like, you know, there are on-chain analytic firms like Chainalysis and things like that, that do have the capabilities to do this. And you're starting to see that, you know, the US government with all the funding that they're getting in the IRS, they are starting to go out and seek out these services. So if you have fraudulent under-reporting, the statute of limitations on that is unlimited, in the States at least. So it is really crucial to report this stuff. And I agree, I'm seeing a lot of the same sort of things that you're seeing where it's like, there's a large amount of people, the vast majority of people are under reporting or not reporting. So I think that there's gonna be a lot of pain for the people who kind of think that they can sweep this under the rug, because ultimately, you know, the governments want their cut of whatever you earned, even if you know, Yeah, absolutely. So yeah, so it's an interesting section, because it's hard to educate people on something that they don't really want to be educated on. They'd rather bury their head in the sand a lot of the times.

Taylor Zork, CPA [00:10:40]:

That's so true. And yeah, we see that every single day. And yeah, it's, I mean, like it is changing, definitely. I mean, like the IRS and a lot of other tax agencies with new regulations that's coming, basically mandating exchanges to provide information on their users. So at the end of the day, it's just a matter of time before IRS notices will show up. So yeah, always it's good to be vigilant and try to make sure you have all your transactions stored and tracked. So even the exchanges go down, you still have the transactional data to file your taxes and do claim your losses or whatever necessary.

Sukesh Tedla [00:11:28]:

Yeah. Yeah, absolutely. So within CryptoScat, like what would you say your ideal user is? Like, you know, different crypto tech software seem to have different advantages and what would you say your software caters to? Like what type of user?

Taylor Zork, CPA [00:11:49]:

So primarily, we are mainly focused on retail investors today as of now. But we do have the ambition to get into the enterprise space as well. And also, like even support accountants themselves with the tool set because at the end of the day, the tool set is almost the same, the fundamental layer of collecting the data, making that data understandable and consumable is the fundamental layer for every single type of user. But as we stand right now, like it's primarily focused on retail investors in multiple jurisdictions. So we already today support 7 jurisdictions, including US, Canada, Sweden, Norway, Denmark, UK as well. And we just added the support for Portugal because they have to pay taxes this year. And yeah, we're expanding quite fast in terms of coverage as well. So we also are expanding to Germany. And this year, we're going to be expanding to 10 other countries as well. So in terms of coverage, it's pretty much increasing every week as we add more features, functionalities into the product. Yeah.

Sukesh Tedla [00:13:07]:

Cool. And what would you say sets your software apart from the competition? Because there's a bunch of different tools out there. And so what would you say your special sauce is?

Taylor Zork, CPA [00:13:20]:

Yeah, I think you're covered right to the point. So it's already getting crowded in a way, even though only 3% less than 3%, 3% to 5% of the whole market is actually being served with these softwares. It's already crowded in a way, but there's no clear winner in terms of the competitors as we see today because every single software, every single software has issues, whether it's showing wrong balances, wrong token prices, or wrong calculations completely when it comes to DeFi and NFTs especially. And missing a lot of coverage to these newer chains, newer EVM chains and things like that. So from day 1, when we started back in 2020, 1 of the good things that happened to us compared to the competitors that started earlier was we came right at the time of DeFi and NFT boom. So which really helped us channel our efforts more on to that space and identify the challenges from the others. And then we try to resolve them from day 1. So compared to others, we provide the best user experience. If you log into our platform, add your wallets like an EVM address, Ethereum address, we automatically go and detect what all the other EVM chains, 30 plus EVM chains that you have interacted with and create all those wallets for you with 1 click. But if you compare that with these other platforms, whether it's Coinly or anyone else, you have to create these wallets 10 times to do the same thing. It's the same address. You're copy pasting and doing it 10 times, which is like, what's the purpose of that? So it's kind of common sense issues sometimes. Other than that, we also are extensively focused on DeFi. So today we support more than 2, 000 plus DeFi protocols in 30 plus EVM chains. And we actually provide an extensive DeFi dashboard within the platform, unlike others. So you can actually see in which protocols, how many rewards are you getting, what's your current DeFi position looking like, what are your lending positions, borrowing positions, everything in 1 dashboard. And we also provide a curated list of DeFi, historical DeFi transactions that you did as well. And the same thing for NFTs. So today we support pretty much all the major AVM chains out there. So you can see all your NFT portfolio inventories, buys, sells, everything in the NFT dashboard as well. And then you can also see all the NFT transactions that you did. And then you can see the buyer, seller, what was the price, net gains that you made on those sales as well. And yeah, and the rest of the features are pretty much the same, similar to any others we we can support. Yeah, I think 1 other feature that we do is this jurisdictional coverage. I think other than us, maybe like 1 or 2 other providers support multiple countries. Most of the providers today only support like majorly US or Germany or UK or Canada, that's it. And maybe Australia. But when it comes to these additional countries coverage, like we are the only ones to do that other than kindly today. So yeah, so there are like a lot of good things, especially from a user experience standpoint that we're working on. And in the coming months, like the CSVs and the API integrations are going to be much more expanded. And more user-friendly toolset are something that we're developing. So people don't have to spend time fixing the issues in CSV files and yeah, just trying to streamline that whole process.

Sukesh Tedla [00:17:24]:

Nice. So last question, are you bullish or bearish over the next year or so?

Taylor Zork, CPA [00:17:31]:

Next year, definitely bullish, I would say. I don't, not a financial advice, but I think with the Bitcoin halvening that's happening mid next year, I think the momentum is going to change. And also, as I told, like I'm 1 of the founding team members of Telos, we just announced a partnership yesterday with GameStop, which is huge. And yeah, and also, like looking at this partnership and being behind the scenes, 1 of the things that I learned is like a lot of traditional Web2 companies are really interested and really wanted to come into the Web3 space. And I think by the time next year, like the Bitcoin hallway happens, I think a lot of these companies will be ready to really scale in Web3. So I'm really looking forward to it. Super excited about the partnerships and everything that we're doing. Yeah, and also, finally, I forgot to mention in the beginning, like we are incubated now by Binance Labs and we are partnering left and right with a lot of major exchanges, DeFi protocols that's out there. So even for CryptoSkag itself, like the next year and this year is gonna be super exciting with our expansion plans and everything.

Sukesh Tedla [00:18:52]:

Very cool. You guys are doing some great stuff. I think, you know, we need all the help we can get for investors, I think, you know, to take their taxes into their own hands. And I mean, obviously there's a lot of benefit to having a CPA involved as well, but for a lot of people who, you know, are doing kind of smaller scale, you know, that's not affordable to them. So to have tools that make it easy for them to accomplish this task. I mean, ultimately, if you put garbage in, you're gonna get garbage out no matter what software you use, but more tools that help people and help people kind of take it into their own hands is really good for the industry. So, well, thank you so much for coming on today, Sakesh. And yeah, we'll keep our conversation going. And yeah, yeah, thanks again.

Taylor Zork, CPA [00:19:45]:

Thank you very much for having me. Really appreciate that. My pleasure.