Crypto Record Keeping – The Unsaid Pet Peeve of Crypto Natives

The very nature of blockchains or distributed ledger systems entails a public ledger of transactions. By this logic, blockchains offer the simplest means of keeping self-audited immutable records without having to use any third party service. To check the records, just go to an available blockchain explorer (for example, etherscan for Ethereum), type in your wallet address and get the list of transactions to and from that wallet.

But what happens when you have multiple places holding your crypto – some on self-hosted wallets (like Ledger, Metamask etc.), some on centralised exchanges (like Binance, CoinDCX etc.), some pooled/staked on DEXes (like Uniswap, Sushiswap etc.) and some held on custodial platforms (like ParJar, Dharma etc.)? How do you reconcile transactions from different places? 

This becomes even more complicated when you have wallets for multiple chains – Bitcoin, Ethereum, Stellar, Binance Chain, IOTA (IOTA is not a blockchain but a DAG; but that is not relevant here), EOS, and so on. There’s no explorer that traverses across chains.

On top of this, there are no explorers that indicate the nature of transactions – airdrops, mining rewards, staking returns, swaps, or sends. Hence, it is necessary for us to keep separate records of our cryptocurrency transactions to be able to have an audit trail. The more detailed the better. Keeping this record helps in accounting reconciliations, tax filing and is a good practice for handling personal finances.

This has become all the more necessary now in the backdrop of a possible FinCEN (Financial Crimes Enforcement Network) push to tighten KYC/AML rules with regard to exchanges dealing with self-custody wallets. Moreover, the institutional inroads into crypto this year (MicroStrategy, PayPal, MassMutual, etc.) means that there will be increasing regulatory glare into cryptocurrency transactions and more tax notices going out than ever before.

There are also talks of SEC suing Ripple for allegedly issuing unregulated securities, which means authorities are not blinking before going after crypto giants. Hence, as an individual, you will stand to gain if your accounts are in order when tax filing day comes. 

There are various platforms outside of blockchain explorers available for doing exactly this – starting from portfolio trackers to tax reporting tools to DeFi managers. Here are a few services that I tried recently to start organising my personal record keeping process. 

Accointing.com aims to be a one-stop solution to track, manage, and report transactions over different crypto exchange and decentralized platforms. What sets Accointing apart from other such crypto tracking/management platforms is that it also allows users to easily generate their crypto tax report, customized according to their country of residence.

You can connect your wallets and exchange accounts to Accointing’s platform through API keys or CSV, and seamlessly track your transactions. Accointing supports over 300 wallets and exchanges, as well as direct connection to Uphold and Coinbase. The list of supported wallets includes Atomic, Bread, Exodus, Ledger, MetaMask, Mycelium and Trezor, while the crypto exchanges include Binance (both CEX and DEX), Kraken, KuCoin, Poloniex, FTX, Idex, BitMex, Bithumb and Bittrex.

You can also enter your wallet addresses to track and import transactions over various blockchains. Once imported, transactions can be classified to properly calculate gains and losses. Investors can get insights on their investments and trades, see the average buy price, profit/loss, and much more. A unique ‘24h-Performance vs Others’ feature lets you compare the performance of your portfolio with more than 40,000 crypto traders.

Accointing provides an insightful feature-rich dashboard to help track transactions and portfolio performance in real-time. You can review the performance of the overall crypto market, analyze your trade performance, research trending tokens, add them to your personalized watchlist, and set up price alerts to utilize market trading opportunities. Apart from the website, mobile apps are also available on both Android and iOS platforms.

As for the crypto tax feature, Accointing not only helps users create country-specific tax reports, but it also provides various suggestions related to the filing of taxes. For example, investors can check whether they benefit from tax-loss harvesting, and whether they are in a long term or short term gain for every coin. A comprehensive guide is also provided which explains the basics of crypto taxes. 

Crypkit is a full-fledged crypto asset and transaction tracking/management platform, specially designed for advanced portfolio management and crypto accounting. Most crypto tracking and record keeping solutions are aimed at retail investors, but Crypkit’s platform can also be used by crypto fund managers, miners, DeFi users and professional investors. 

Crypkit lets users track transactions from crypto exchanges, wallets, blockchain addresses, DEXes, smart contracts and DeFi platforms, and amalgamate all of them into a single accounting suite. Users can classify and tag their crypto transactions, create journal entries, and publish accounting reports, which helps in a more streamlined record keeping.

Crypkit currently supports most major exchanges (including Binance, Bitfinex, Bithumb, BitMEX, Bittrex, HuobiPro, Kraken, KuCoin, OKEX, and Poloniex), DeFi protocols (like Aave, Bancor, Compound, dYdX, Synthetix, and Uniswap), and DEXes (such as Gnosis Protocol, Kyber, and 0x). More DeFi platforms and DEXes are planned to be supported in the future.

Exchange transactions can be tracked by providing read-only API keys. For wallets and DEXes, you just have to insert your blockchain address and Crypkit automatically starts recording transactions. You can also track your staking (only XTZ, DCR, ATOM and SNX currently), farming and mining records through Crypkit.

One of the most important benchmarks investors consider when choosing a fund manager is the Net Asset Value (NAV). Crypkit lets fund managers automatically calculate and view their NAV, fees and shares of each investor. They can also generate performance charts benchmarked against crypto or fiat currencies, and share them with investors, allowing them to easily compare different fund managers’ performance.

Maintaining data on the price and date of purchase is always a headache. Crypkit solves this by saving a snapshot of the portfolio every day. Professional investors and fund managers can use this feature to view their historical portfolio data and assess their performance over time, while retail investors can find this useful for accounting and tax filing purposes.

Zerion provides an extremely convenient way for users to not only track and record DeFi transactions, but also build and manage their DeFi portfolio. Zerion aims to be a complete solution for the entire DeFi journey – exploring new assets, placing a trade, investing in complex primitives, recording transactions and tracking portfolio, all from one place.

Zerion has integrated major DeFi protocols, DEX aggregators and liquidity pools, including Uniswap, Balancer, Curve, 1inch and 0x. By sourcing prices from these platforms, Zerion offers the best rates to investors, and lets them buy and sell DeFi tokens in a single transaction. These trades with optimized routing are made possible through DeFi SDK, a library of smart contracts that acts as a universal adapter for every DeFi protocol.

DeFi investors can use Zerion to explore the entire DeFi marketplace, search, filter and evaluate DeFi assets, track trending projects and tokens, and compare historical returns. Individual asset pages are provided for every DeFi token, which host historical performance, key metrics and relevant project information. Zerion also provides a dynamic overview of trending assets and protocols, including reward tokens from yield farming and liquidity pools.

Zerion directly works with Web3 wallets like MetaMask and hardware wallets like Ledger. You can also enter your Ethereum address to track wallet transactions, and use the History page to see your previous transactions directly on asset pages. Push notifications are also available to keep investors constantly updated with their portfolio.

Zerion’s platform lets users check their net worth with an aggregated view for multiple wallets, see full wallet history, and dive deeper with advanced ROI metrics. Apart from the desktop website, Zerion also provides mobile apps for both Android and iOS users, letting them seamlessly track and manage their portfolio, and view the entire DeFi market on the go.

Crypkit, Accointing and Zerion are just some among many crypto accounting platforms out there. I found these three to be rather comprehensive and easy to use. What’s important is to start the habit of noting down any and all transactions. 

Set up notifications for your addresses/wallets. Check balances and transactions every one or two months. Categorise transactions into suitable headers. Make sure to use cost-basis accounting. By inculcating good financial habits, you will be spared shocks from sudden discoveries of unrealised crypto losses/gains. An unexpected tax claim notice won’t show up at your doorstep if you have been keeping audit trails. The advantages of having detailed records far outweigh the efforts involved in maintaining them.

Disclosure: The author has no vested interest in the projects mentioned in the article. These are all utility portals and have no financial incentive attached to them in any way.