Last time our team reached out to Cryptiony - a company which made an app, that helps investors tax crypto. Today we provide you with an interview with Bartosz Milczarek, Chief Executive Officer.

FXMAG.COM: How do you see 2023 in terms of crypto regulation? Is there any sign of a global consensus on the horizon?

Bartosz Milczarek (Cryptiony CEO): The year 2023 will certainly be important in terms of regulation of this industry. Since last year, we have been observing significant progress in regulatory work. However, it is unlikely that these regulations will be implemented in 2023. It is also difficult to talk about global regulations. Nevertheless, in many regions of the world, work is underway to regulate this industry. Work on the MiCA regulation, which covers the entire European Union, has been underway since 2018, the European Parliament is to vote in April this year, and if it is approved by the EU Council, it may come into force as early as 2024 - after 18 months of voting. The MiCA regulation is the first attempt to comprehensively regulate the functioning of crypto-assets in trading. The European Union is already working on further regulations on administrative cooperation covering tax reporting on cryptocurrencies - a proposal to regulate this area has been proposed in the DAC8 directive, which may enter into force in 2026. This directive would impose an obligation on entities enabling cryptocurrency trading to provide information on transactions their clients to the relevant tax authorities.

In 2022, we recorded the collapse of the Terra project or the bankruptcy of the FTX exchange. Such events will only speed up regulatory work.

On February 1, 2023, the British HM Treasury announced a proposal for new regulations governing the cryptocurrency market and announced legal consultations that will last until April 30, 2023. According to the local authority, their goal is to introduce clear regulations regarding the cryptocurrency industry. It is important that the local authority announced that the cryptocurrency industry is ultimately to be subject to the same regulations and institutions as traditional financial markets - taking into account the specifics of the industry. The proposed regulations by the UK government have a similar purpose to the MiCA in the EU, which is why they are called the small MiCA. Similar regulatory work is also taking place in the United States. In 2022, we recorded the collapse of the Terra project or the bankruptcy of the FTX exchange. Such events will only speed up regulatory work.

What is your main product? How many people are currently using it? Are these customers who bill you monthly/quarterly/or just annually?

Our main product is a web application for self-settlement of tax on cryptocurrency trading. With the help of the application, the user of the cryptocurrency market can independently settle the cryptocurrency turnover in a few minutes. We have already had 2 tax seasons in Poland behind us, in a moment, from February 15, we will start the third year of operation in Poland. From January 2023, we also offer our services in the UK. Surprisingly, in the UK tax settlement on crypto activity is much more difficult than in Poland. i.e. there are more complex methods of calculating revenues and costs, as well as more operations should be included in such a settlement, e.g. crypto-crypto transactions, airdrops, staking. Customers settle the crypto tax in annual returns, so our business model is also based on annual subscriptions.

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What do you need so much money for? Would further bootstrapping be impossible?

Development from own funds would certainly be much slower. We raised over PLN 2,500,000 (EUR 500,000) from two American Venture Capital funds and one Business Angel from Poland. We needed these funds to expand into the UK and completely redesign the app to make it even easier to use. If we look at the pre-seed financing round through the prism of the Polish pre-seed rounds, where the median for the first financing round is PLN 1.1 million, we actually achieved an above-average result. However, if we take into account that these funds were allocated to foreign expansion, it is not such a large amount. Let's note that TaxBit - offering a similar application in the US, raised USD 100 million in one round, and raised over USD 235 million in total - but they still offer their services only in the USA. It should also be remembered that having VC investors or Business Angels on board is not only financial resources, but also the so-called "smart money". We have support from people who have experience in scaling businesses.

Read the second part of the interview here!