Things to know while granting API access for your cryptocurrency exchange account.

A question being asked frequently by a lot of our website visitors is “whether the platform or the software has access to their trades and could potentially place trades or access their funds?”

Photo by Koen Eijkelenboom on Unsplash

API = Application Program Interface.

API is a way to interact with the system (In this case, it’s an Exchange) from an external application. This interaction is/can be restricted by the system(Exchange). A user can grant Access and Authorization using the settings on Exchange.

The access is a multi-level feature and could be one of the below options.

  1. “Read Only” or called “View only”— this will only allow someone to read your transactions to get an idea of what you are doing or provide you analysis about your transactions. Applications with this access CANNOT alter or perform any actions on your account.
  2. “Trade” — This is something used for allowing external applications to trade on your behalf. These could be high-frequency trading systems or brokerage accounts. Allowing this access is very risky and should never be granted to applications unless you TRUST them completely with trading on your behalf.
  3. “Transfer”— This access will allow the third-party applications to send and receive assets. This is not recommended to be granted to general third-party applications. This could potentially sweep away all your funds if left in wrong hands.

Now that you know what an API is and the differences between various access permissions, you can grant permissions knowledgeably.

Can tax calculators access your funds via API?

Short answer: To have the answer NO, you need to grant “read only” or “view only” access

The first step to calculate your tax liability (capital gains) on trading cryptocurrency is by consolidating trades from the exchanges that you have traded.

Usually exchanges will offer an option to download complete trade history but few exchanges will only provide an API to do the same. In such cases, there is a demand to understand the import of trades via API.

Tax calculation softwares like BearTax can calculate your tax liability using general trade history files (csv, excel formats) and API to provide you with required tax documents based on fiscal tax year and native currency.

BearTax will always ask only for a “read-only” or “view-only” access as we need to just read your transactions and fetch them to calculate your tax liability. So, fear nothing and go ahead to calculate tax liability on BearTax.

If you have got any questions regarding the API or granting access or using the tax calculation software, reach out to us at support@bear.tax.

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