CryptoTax uses ITINs to identify cryptographic tokens in tax reports
International Token Standardization Association (ITSA) e.V.
Author: Stefan Schmitt, Klaus Himmer
When trying to identify crypto assets, it can easily be seen that no unique identifier exists: Bitcoin is called BTC but sometimes XTC. The symbol BAT stands for both Basic Attention Token and Batcoin. These two examples clearly illustrate the urgent need to identify tokens uniquely. CryptoTax, a start-up providing aids for the tax declaration regarding crypto assets, cooperates with the International Token Standardization Association (ITSA) e.V. to enhance their services. The International Token Identification Number (ITIN) serves CryptoTax as the standard for the unique identification of tokens. Meanwhile, ITSA expands the identification for cryptographic tokens to over 3,900.
Crypto tokens need standardization when it comes to clear identification. Currently, as exchanges and startups assign the identifiers/abbreviations themselves, those identifiers don’t allow unambiguous identification. This can easily be demonstrated with two examples: Bitcoin is often referred to as BTC, but sometimes it is still called XTC. The Basic Attention Token can be found under BAT at most exchanges, however, the Batcoin uses the same identifier.
CryptoTax, an associated founding member of the International Token Standardization Association (ITSA) e.V., offers its customers assistance in the taxation of crypto assets. The correct presentation of taxable income through trading with cryptographic tokens is complicated because each transaction must be recorded at the applicable trading rate. In addition, the inconsistent identification of tokens has made it difficult to capture them to this day. Currently, depending on the trading venue, abbreviations or codes with 3 to 5 letters are used to identify the tokens. However, these sometimes differ from each other depending on the trading venue. In addition, abbreviations may be duplicated or may change over time, leading to high operational risks in trading.
To counteract this lack of transparency and the associated risks, ITSA has developed the International Token Identification Number (ITIN) analogous to the International Securities Identification Number (ISIN). The ITIN represents an openly accessible market standard for the unique and secure identification of cryptographic tokens and assigns each token a unique eight-digit identification number, the Token ID. This is supplemented by the checksum, an integrated control mechanism that ensures the correct communication of the ITIN. Thus, the ITIN consists of nine digits. CryptoTax will use the ITIN database for its own service, which was recently expanded to 3,900 registered tokens.
The standardized identification of tokens is necessary in order to meet the requirements of financial market participants, authorities such as tax offices and institutional investors. Constantin Ketz, Deputy Chairman of ITSA, confirms the urgency of this development: "For cryptographic tokens - regardless of whether they are so-called cryptocurrencies, utility tokens or security tokens - it is extremely important that they can be identified securely. This is the only way to make cryptographic tokens ready for the market, which makes them interesting both for institutional investors and the industry". CryptoTax CEO Klaus Himmer adds: "For the correct processing of tax returns, it is desirable that an industry standard such as the ITIN be established, which is used by all market participants.''
Starting in June, CryptoTax will use the ITIN to simplify processes and offer its customers a broader range of recorded tokens.
Remarks
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Klaus Himmer is CEO and Co-Founder of CryptoTax. He is an expert in the taxation of blockchain-based assets. As a consultant at a major accounting firm, he advised banks, investment management companies and other financial service providers on questions of product and corporate taxation. Against this background, his focus is now on the technical implementation of tax and accounting-induced processes for private investors and companies in the crypto environment.
Stefan Schmitt is the Marketing & Communication Manager of the International Token Standardization Association (ITSA). Next to managing a blockchain project supported by the European Union for the Frankfurt School Blockchain Center (FSBC), he works as the Manager of CASH ON LEDGER, a payment solution provider, enabling clients to execute payments on blockchain with central bank money. Mr. Schmitt holds a B.A. in International Management from the International School of Management as well as a Master in Finance (M.Sc.) from Frankfurt School of Finance and Management. You can contact him via email (stefan.schmitt@itsa.global) or via LinkedIn.
International Token Standardization Association (ITSA) e.V.
Stefan Schmitt, Marketing & Communication Manager
Email: stefan.schmitt@itsa.global
Website: https://www.itsa.global/
CryptoTax (21 Consulting GmbH)
Klaus Himmer, Founder & CEO
Email: presse@cryptotax.io
Website: https://cryptotax.io/
