M&A Deal: Blockpit acquires CryptoTax
Our M&A team led a lighthouse M&A transaction for Blockpit, the Austrian expert for legally compliant reporting for digital asset trading to acquire its German competitor CryptoTax. With this acquisition of its biggest and larger European competitor, the company intends to drive expansion into the US and global markets, like Canada, Australia, UK and other European countries in 2021.
Both companies provide legally compliant proofs of origin, which can be used to calculate and report taxable profits from trading with crypto currencies and digital assets. The portfolio company of EXF Alpha, the syndication fund of the pan-European investors network European Super Angels Club, has been a long-time partner to Venionaire and with this cross-border transaction, the digital tax expert wants to profit from economies of scope and ensure its international competitiveness.
“Although, Blockpit and CryptoTax are active in the same market segment, they have different focuses and strengths. We took a close look at the company structures and recognized a very huge synergy potential, especially in the combination of technology and the extended country coverage”, says Florian Wimmer, Founder and CEO of Blockpit GmbH.
“The medium-term goal is to combine both companies to a renowned global player as well as an intensive expansion into the US market”, adds Klaus Himmer, Co-founder and Managing Director of CryptoTax.
To meet these expansion plans, the teams of both blockpit and CryptoTax will remain in place in Linz and Munich respectively. The merger will not change anything for existing customers of both companies for the time being. Previous functions and price models will remain the same and the transition to a common platform should take place smoothly in the background. Over the next few months, the CryptoTax frontend will be redesigned and adapted to the Blockpit interface, and new functions will be added as well.
“Successful mergers which close within less then 3 months need a couple high quality ingredients: great founders, a strong story for both companies post merger, clear roles and amazing partners, advisors and lawyers – BlockPit had them all. ” – said Berthold Baurek-Karlic, CEO of Venionaire Capital.
Audit-proof tax reporting
Blockpit and CryptoTax are currently the only providers whose tax-optimizing calculation methods and resulting reports are specifically audited per country by one of the Big Four accounting firms. According to Blockpit, the strong focus on the user-friendliness of the software as well as the increasing acceptance of the legally audited reports by the authorities is expected to lead to success in the international market. In addition to the current coverage of the US, Germany, Austria and Switzerland, the offer of reporting for digital asset trading is to be expanded in 2021 to new markets such as the United Kingdom, Canada, Australia, South Korea and other EU countries. It is, however, already possible to use the software to generate a standardized global report on all transactions that have taken place, which can be submitted to the respective tax authorities.
From crypto tax expert to full RegTech
The expanded product range resulting from the acquisition is another major step towards a holistic RegTech for digital assets. A Capital Gains Tool, developed by CryptoTax, offers tax reporting for traditional securities as well, while Blockpit, through the development of a Know-Your-Transaction (KYT) Tool, has set its sights on anti-money laundering services and risk profiling of digital assets in addition to tax returns. With the extended product range, the company is preparing for the upcoming introduction of a new Markets in Crypto-Assets Regulation (MiCAR). “By implementing the functions, we are also prepared for the coming EU-wide regulation, as MiCAR plans to classify crypto currencies, digital assets and also stablecoins as regular financial instruments before the end of this year,” Wimmer enthuses.
Blockpit decodes crypto trading
Through the acquisition of CryptoTax and the formation of a globally leading provider for legally compliant transaction reporting, Blockpit once again demonstrates its pioneering spirit. Only last year, the company garnered attention by issuing the first security token under Austrian law. The so-called “TAX Token” of Blockpit guarantees a revenue share in the form of a profit participation right securitized on the blockchain, which brought Blockpit more than 2.5 million Euros in fresh capital.
The company recommends all taxpayers to document all income from digital asset trading transparently and clearly. “Many private investors as well as companies and large traders still assume that the taxation of profits from crypto trades is a grey area or are uncertain about the current legal situation; however, the regulations here are clearly specified by financial authorities and we recommend a complete documentation of all trades for legal security . These reports can and will be demanded by the tax offices”, explains Florian Wimmer in conclusion.
Both Blockpit and CryptoTax offer free tiers of the web-based crypto tax reporting application.