Trying to Keep Up With Crypto Taxes, Conflicting Marijuana Regulations

One of the topics we get asked about most here at Early Investing is taxes – especially as it applies to cryptocurrencies. Unfortunately, we’re not tax experts. That means we can’t give you specific advice about taxes (though we can answer general questions about how the government taxes cryptocurrencies). But you want to know who can give you specific advice?

TurboTax. Intuit’s popular tax preparation software announced this week that Coinbase customers can upload their transactions to TurboTax Premier. Based on the transaction history, TurboTax Premier will help customers figure out just how much they owe (or can write off) in taxes (Coindesk).

This is a huge step forward for crypto investors in the U.S. The IRS guidelines surrounding crypto are murky at best. So a massive tax preparation firm – especially one that’s willing to help with audits – calculating and handling tax payments provides an extra level of comfort and security for taxpayers.

If you bought and sold crypto last year, make sure you get some tax advice before filing this year. It doesn’t matter whether it’s a CPA or TurboTax. Taxes surrounding crypto can be tricky, so make sure you get some good advice before filing.

Now to the News Fix!

Startups

Our own Andy Gordon has written extensively about just how much he dislikes the big checks that venture capital (VC) funds like SoftBank dole out to startups.

Listen, this is not an anti-money diatribe. Money is NOT the root of all evil. But, like a lot of things, too much of it is not good. It can too easily lead to capital inefficiency while disincentivizing hard work. I’ve been in the investing business for a long time. The period in which I trust a company’s judgment the most – especially its capital expenditure decisions – is when it’s seen its cash reserves dwindle.

Add Basecamp CEO Jason Fried to the list of people who are on Team Andy when it comes to VC money.

“Raising a bunch of money, and raising way more than you need, it ends up stunting people’s actual growth as businesses. It destroys businesses,” Fried said on the Recode Decode podcast (Recode).

VCs aren’t the only things that can destroy small businesses. So can bad (or just plain expensive) lawyering. Finding good, inexpensive attorneys who understand startups is a critical and ridiculously difficult task (in fact, I’ve been offered consulting gigs just to bring on good legal representation).

TechCrunch is trying to make this process easier. It is creating a “living” list of startup-friendly lawyers that founders and entrepreneurs can tap into (TechCrunch). This project has the potential to make the lives of startup founders a lot easier. We hope it succeeds.

Over in Asia, the once red-hot Chinese startup scene is cooling off. Hiring is slowing down, as is the amount of VC being invested (Crunchbase).

Cannabis

There was so much marijuana-related news this week that we could have devoted a whole News Fix to it. Instead, we’ll just give you the (really) abbreviated highlights.

  • CBS has rejected a Super Bowl commercial that shows people who have been helped by medical marijuana and urges Congress to change federal law regarding medical marijuana (USA Today). This type of censorship is ridiculous and uncalled for – especially during an event that’s going to have nonstop beer commercials. Please call your local CBS affiliate to register your displeasure.
  • California approved a rule that permits marijuana home delivery throughout the state (USA Today). But the police and communities that don’t want marijuana home delivery don’t like the rule, so the California Highway Patrol is still arresting marijuana delivery people (The Modesto Bee).
  • New legislation in Kentucky would decriminalize marijuana possession (Lexington Herald Leader).
  • The marijuana industry in Massachusetts is struggling to comply with state and local regulations that are sometimes in conflict (MassLive). The industry would prefer to comply with just the state standards. It brings compliance costs down and makes it easier to scale up.
  • Florida’s new governor, Ron DeSantis, is shaking up the state’s medical marijuana scene in a good way. He’s proposed a regulatory overhaul that includes legalizing smoking medical marijuana. And legislators are working on eliminating mandatory vertical integration (growing, processing and distribution) requirements for dispensaries (Miami Herald).

Crypto

And finally, on the crypto front, we have a couple of interesting news nuggets.

  • MIT researchers say they’ve created a cryptocurrency that’s much faster and more efficient than any other coin on the market. Vault, as it’s called, uses 99% less data than bitcoin (MIT News).
  • There’s a new cryptocurrency custody solution for institutional investors. It’s called Anchorage. And it’s funded by Andreessen Horowitz, SciFi VC (headed by PayPal co-founder Max Levchin), Khosla Ventures and more. Anchorage just completed a Series A round for $17 million (Cointelegraph).

And that’s your News Fix!

Have a great weekend.

Vin Narayanan
Senior Managing Editor, Early Investing