Bridging the Compliance Gap: Navigating Crypto Trends and The Future of Taxation with Blockpit

Speaker A: Welcome to a new episode of the Elevator Ventures podcast. I'm Mara Ene, the PRN Marketing Manager at ev, and I'm excited to be your host in our journey through venture capital and innovation. From Vienna, right in the heart of Europe, we elevate your growth. Today's spotlight is on um, blockbit, our latest investment and a leading player in the blockchain technology space. You'll hear the highlights of an insightful discussion between our advisory board member and chair at Fintech Circle, Susanne Chisti, and the CEO of blockbit, Florian Wimmer. They explore the latest global crypto trends as part of an in depth webinar that is linked in the episode description. Afterwards, our senior Investment manager, Ivar Akochevic, will join Florian for a conversation about BlockP's vision and the reasons behind our investment in this dynamic company. Let's dive in.

Speaker B: Good morning, uh, good afternoon wherever you are in the world and uh, welcome 2025. We thought we want to kick it off with a topic, uh, which has been raised in much, much more, uh, much more, uh, attention, you know, also based on the US elections, which is cryptocurrencies. And we wanted to choose a speaker who has got expertise for many, many years and who built up his own company. And so I'm very excited to introduce to you today. First, Florian Wimmer. Hello, Florian. Hi. And good, hello and good morning. Now I will hand over to you. We look forward to your thoughts and your insights on the global crypto markets and the trends you see for this year.

Speaker C: Thanks Sanne. Great, uh, to be here.

Speaker D: Thanks for having me. Overall, um, the market is growing. We are seeing um, a trend going into the right direction. We have, I have identified like four trends that might be the big things of 2025. Um, one thing is decentralized finance. It's already big things since 2020, but, um, it's now with institutional adoption coming in, it's actually going to be used, um, for the purpose it was made for. And right now you can already use decentralized finance protocols for every financial transaction. Every, uh, transaction type, be it options, futures, contracts, leverage trading, uh, savings and lending. Everything that you can do in traditional finance, you can do on the blockchain without an intermediary. It's a little bit tacky still. It's not, uh, really open for the mass markets, but you can use it if you want. Um, and there is enough liquidity for it to actually make sense and it gives better yields, um, because obviously you're cutting costs, you don't have middlemen you don't have institutions, you don't need to pay people. It's purely code on a decentralized database that in theory should not be hackable and it's working well. So if you're not in defi, um and you're not a techie, you might not even recognize this. But slowly and steadily, um, the front end that you use in your global banking app, like online banking or mobile banking, they will adapt this in the back end as a new technology because it's cheaper. Um, it will not really change for the end user in an ideal scenario. Second topic is real world assets on chain real estate, company shares, um, wine, um, anything that you can give value to but that's not easily traded, it's hard to transfer but people want to potentially speculate uh, on it or just want to have like a clear record um, of ownership. The blockchain is the ideal technology for this. Um, we did not have the legal framework to make that um, uh, like real. But now we, we are coming closer to having the real, the, the legal framework and the technology to use token um, as the technology for, for ownership certificates, company register, um, land register and and uh, obviously once you have it in the digital space it's way easier um to also transfer and trade it. AI obviously does not go past crypto. Um we're seeing a lot of AI agents, uh basically the wealth managers of tomorrow, um that uh actually trade money. Um, there are AI agents out there that just outperform most funds in the world. Um, trading crypto uh tokens purely on sentiment and however the AI is programmed. A16C, the crypto venture fund from Andreessen, uh Horowitz is also one of the biggest AI is. There's like AI 16C which is one of the main UM AI agents out there which I think made a few hundred million in profit already. And the last uh potential trend that we're going to see is gaming. It's been a trend in the past, uh, trading um, and, and digital assets in games, um, being sold right, skins or, or any kind of currency to unlock additional features. Anybody who ever played like a mobile app, this is like these microtransactions where you can buy additional stuff in game to maybe look your, make your character look uh, better or get additional uh tries in a level. These things make total sense to bring also on chain so everything that has value or can be used as like kind of a currency, um, it makes sense to use blockchain in the back end. And what this enables is like cross Game transfers. Right? You have like a, a digital economy that's, that's getting established here. While in the past it's basically the, the, the gaming firm, the gaming studio in the back that had a high, like they could control everything. If they wanted to delete your asset in the game, they could just do it if it's on the blockchain. That's not possible anymore. And a lot of gamers are actually uh, looking forward to this. But it takes a while to develop a game which is why we've not seen anything so far. But there are a few titles announced for 2025 which could actually attract millions of people. We'll see about that.

Speaker B: How could we stop the volatility and the speculative nature of crypto? Any thoughts?

Speaker D: So there are multiple ways to go about it. Um, the higher the price goes, the less volatile it is because it needs more money to move the needle. That's one. So we're seeing uh, bitcoin. Bitcoin is still in a consolidation phase on finding the right price. But if we really go to a market capitalization of gold, which is like 10x out of this right now, is probably also going to establish the volatility like gold. The other thing should be or could be regulation, um, if you regulate the space and limit access, um, for actors to create new assets out of thin air, um, however they please, that could help. But I think it's really, really hard to do that um, in a borderless global digital economy. Um, there's always going to be ways um, to bypass this. Um, we are seeing that um, especially in like Europe and the US There is now the MICA regulation. There are similar regulations uh, that affect everybody who wants to issue a new token or coin, um, which will hopefully improve the quality a little bit of what's out there. But I think you can't really take away the speculative nature. It's like you would have to close all casinos in the world and just forbid gambling um, to really take tackle this. Um, I just hope that people learn early and they learn without losing too much money uh, because that's the most efficient way, at least in my case.

Speaker B: Um, we've got any, any asks with the many exchanges that is still, is it still considered to be centralized then? Will crypto be completely decentralized without exchanges? And when is it easier to change back to fiat currencies? Because crypto is not yet easy to use for grocery shopping, for example. So what are your thoughts Florian, on this one?

Speaker D: Great question. Um, I say we're halfway there um, so right now it's really like centralized and decentralized merging together. And the second part of your question, Annie, is actually answer. As long as there's fiat currency, you need exchanges because you need to have the bridge of getting your pounds or euros or dollars into the decentralized space. And that can only be done via regulated and trusted actor, uh, which can be an exchange or broker or bank if we get to the point where crypto is used in the daily business. And I'm not sure if Bitcoin is ever going to be like the standard, uh, payment token, uh, or currency. But if it would be, um, and you get paid in Bitcoin working at your job and you can pay in Bitcoin for your groceries, then you don't need centralized exchanges anymore. Then you basically, you are in the decentralized space, um, on your daily life and you will do everything in a decentralized space. Big savings, trading, um, borrowing and lending, um, but we're still out. Uh, I think it's going to take us at least, uh, 15 to 20 years to go fully decentralized. Um, right now the challenge is to make the gap and the bridge as small as possible, uh, to go from centralized to decentralized. Uh, and we're seeing the traditional huge actors like BlackRock, some major banks embracing the technology. They move slow, but they have the power and they have the reach and they have the users and the customers right to enable this mass adoption. So we need them and that needs time.

Speaker B: Fantastic, Florian. And we've got two last questions now. The first one was about AI and quantum computing. Uh, how dangerous is AI in quantum computing for blockchain and crypto assets?

Speaker D: So I'll start with the more predictable one first, which is quantum computing. We know exactly what quantum computing can do, uh, at the moment and what it will be able to with every qubit you add to the processing power. The good thing is that, uh, it is quite easy to build quantum resisted encryption. We don't have it active yet. So the encryption we use globally right now, um, is not quantum resistant. It is resistant to the current capabilities of quantum computers and it will potentially be until they are 100 times as powerful. We don't know how quickly that's going to happen. Could be a month out or it could be ten years out. Um, but the thing that breaks first is a traditional financial system. It's not crypto. Um, so every password, every, everything that's encrypted, it's going to be Hail Mary, complete chaos everywhere in the world. Um, so everybody's already working on quantum resistant encryption. And I'm pretty sure we are going to be able to figure that out before quantum computing gets too powerful or otherwise. We have heavier M problems than crypto. The second one is not as predictable. Um, and that's AI and its impact on everything, um, especially crypto due to the immutable nature of blockchain. So if I want to scam somebody, I can scam them out of their dollars or pounds or euros, the bank account. But if they make it right, they can revert the transaction. Right. And, and uh, maybe the bank blocks it because they have security mechanisms in it. If it's a, it's a strange and suspicious, uh, IBAN that I sent to with crypto. If you send it, it's gone. And AI is really going to bring the whole scamming industry to the next level. We're seeing deep fakes, we're seeing uh, voices and video, uh, being real time cloned. I can make a twin of myself and hold this webinar. It's already possible. It's only going to get better and better. So that's a danger. I think AI is not going to be a danger to blockchain technology per se. Um, I think actually blockchain technology is the solution for this problem because it can flag original content. So if you have a blockchain, it's, it's immutable ledger of, of, of data that um, if you don't hold the majority of all nodes, you cannot change the data and it's going to be hard for AI to control that. So let's say President, uh, Trump now does a video statement. He could record that video statement and put a hash on the blockchain and then release it. And then if all the social networks in the world start taking that proof of the blockchain as like the indicator and mark this as original with a little star or whatever, then we can easily filter out what's real and what, what's not. So we need to go from avoiding scam or spam or anything that's altered because we can't, to identifying the real thing, identifying the truth. And I think blockchain is the best thing to do that.

Speaker B: What a great way to ending our webinar, Florian, to really also showcase the power of blockchain, maybe for our democracies, you know, in our soc. So very good point. So I would like to thank you very much, Florian, for sharing your knowledge, expertise, you know, so generously with all of us. Take care.

Speaker E: Bye bye.

Speaker B: Everybody.

Speaker E: Welcome to Elevator Ventures podcast. In our recent webinar with Suzanne and Florian, we have explored key trends shaping the future of financial transparency and compliance. If you hadn't had a chance to listen yet, we highly recommend checking out, uh, the full recording linked in the episode description. Today, we are excited to continue that conversation. I'm Eva Rakorovic, Senior Investment Manager at Elevator Ventures, and I'm joined by Florian Bimmer, CEO of Blockbit. We are thrilled to announce our investment in Blockbit, a company at the forefront of regulatory report technology, helping to bring trust and efficiency to the financial system of the future. In this episode, we'll dive into Florian's journey behind launching blockbit, the challenges they faced navigating the evolving regulatory landscape, and how their technology is addressing the complexities of crypto compliance. We'll also explore where, uh, blockbit is headed in the coming years and how their solutions are set to play a key role in the future of crypto taxation. So let's dive in. Florian, we've heard a lot about Blockbit, but we would love to hear your personal story. What was the spark that inspired you to launch Blockbit? And how did you envision the company in its early days? And looking back, how has this initial vision evolved as the company has grown and adapted to the industry?

Speaker C: Hi, Eva. Uh, thanks for having me.

Speaker B: Great.

Speaker C: Um, question. Um, it's been a while since we founded the company, uh, over seven years, actually, and it really stems from a, uh, personal problem. So I myself am, um, in crypto since, uh, 2015, where I bought my first Bitcoin and fell heads over heels into the whole Blockch ecosystem, so to say. And just two years later, the Austrian Ministry of Finance, they issued a clarification paper on crypto taxation and how you have to calculate and report your taxes on gains, uh, in crypto. And it was a really complex topic where you had to have a look at every transaction valuation of the asset at that point in time of the transaction to euro. And back then I was really 247 crypto. I was trading on 20 different exchanges and brokers. I had my hardware wallets where I stored my crypto offline. I did some, like, mining operations in my cellar where you mine bitcoin with electricity and thousands of transactions, hundreds of different assets, and then across multiple accounts. And it was just plain impossible to keep an overview, just calculate, um, what you actually had in gains and if they were taxable. So I went to a few accountants, tax advisors, and basically everybody sent me away because it was just so new. Um, and nobody wanted to have anything to do with it. So the only thing that I had left was to rely on my technological knowledge. So I studied uh, software engineering and uh, started building a uh, kind of calculation tool service where I read out data from all those different uh, accounts that I had, try to reconcile it and then apply the uh, tax framework, tax law basically to an algorithm to calculate my taxable gains. That is the early stage of the product that Blockbit, uh, now is selling. It was more of a hobby back then. Like a hobby. Like I had a panic personally to not go to jail for tax fraud. But that's how it all started. And I had the software engineering background and I've been actually working at KPMG for four years after my studies. And I uh, had coworkers that had the background in accounting and tax advisory. And so the basically founding team came together, um, and after getting some feedback from other crypto users to the tool and that they would like it and they would pay for it, that was uh, the day when we decided, okay, we should make a company here, um, on your question on how we envisioned it in the early days, it was really just like solving our own problem. Right? Um, and obviously in the beginning that's cool, but you're building something for yourself and if you want to address a broad market at some point you have to deviate from that vision. And so now seven years later,

Speaker D: um,

Speaker C: it has evolved into being a data driven um, enterprise for the masses. Um, we expanded in different countries, different regulations, um, so we had to adapt to the industry um, itself like blockchain and crypto. It's just fast moving, being yet to adapt to regulation and obviously also to our target group so that we can cover the largest part of the market.

Speaker E: That makes a lot of sense. Uh, however building a company in the regulatory landscape of crypto is no uh, easy feat. Um, so uh, I'm curious, uh, what are some biggest hurdles you've faced navigating this ever evolving and very often fragile environment and eventually how have you managed to overcome?

Speaker C: So I think the biggest hurdle that we had was timing. Um, while it was a pressing topic for us back then, when we found it we were just far too early, um, with the topic. Um, there was no clear regulation. Nobody um, really cared about tax compliance. So the target pool of willing to pay customers was really small. Um, so we really had to survive um, a lot in the beginning because we overestimated the market and we also overestimated in how fast regulation in the space will develop. So we Started in a bull market of 2017 where crypto went from 1,000 to 20,000 within a year. Everybody thought now, uh, we're going to get to mass adoption. And then the market crashed and nothing happened for like two and a half years. So we completely overestimated the pace, um, and then had to tune back, um, and go into survival mode. Um, and we actually had to do this two times, um, up now because there's been two such cycles once again went up in 2021 and then crashed in 2022, um, followed by like two years of like crypto winter bear market. Um, so how did you manage that? Um, by being well financed, um, at the right time. So we did our first major fundraising round in 2019, um, where we onboarded actually a lot of investors. We did a security token sale and onboarded 55 investors, ah, institutional and private. Um, it was like a participation, right security paper in the company, um, which then was really a lifesaver in those hard times because we had so many investors um, in the company that we found people to finance us in hard times as well. So that was like the hurdle of timing, um, which killed a lot of our competitors because it's not so easy to survive two years of a harsh market as an early stage startup. Uh, but obviously we could also then leverage opportunities because we were one of the uh, little financed companies in the space. So we actually did two acquisitions, um, almost always towards the end of such a bear market phase. We acquired a German competitor and a Swiss competitor, um, which really turned this hard time into an opportunity, um, for inorganic growth for us. So that was one, um, of the major risks and hurdles we have. The other one is obviously expansion. Um, different jurisdictions have different tax laws. And especially Europe, our core market, it's 48 different countries with uh, 48 different crypto tax regulations. Um, so for us it's really not as easy to enter a new market in a compliant manner, um, than it would be. For example like the us It's a market that's the same size but it's like one big um, crypto regulation for almost the same amount of potential customers. So Europe is a little bit harder in that regard. But once you have that down, um, then you have a huge lock in effect. So we had this expansion, um, so to say, but obviously it's the same for everybody. So in the end it turned out to be a benefit, to be the only one surviving and actually managing those expansions. And then you have the fast moving market, like new technology, right? There is no Blueprint. There is no um, competitor or market out there that you can look at um, and see how you can surpass them and what your USP sins are. So we had to adapt a very data driven strategy in the beginning. Um our estimations, being users and clients of our own product obviously helped. We knew what was needed kind of the market. But for the mass market we needed to have a look at objective data so tracking, analyzing the trends, the user behavior to really develop towards the right direction.

Speaker E: You've mentioned the market and you've mentioned also some very exciting trends in crypto during the webinar previously uh obviously ah, looking ahead, where do you see Blockpit positioning itself in the next few years and really how do you see these trends will shape the company's future and the industry as a whole.

Speaker C: So there are a lot of trends as you mentioned. Um, the biggest trend for us as a company is obviously regulation. Um it's always like a catch up game um with technology. The regulator is always behind uh technological development and we've seen a lot happening in crypto specific regulation over the last years. Um, we've seen the AML D5 uh for anti money laundering um Directive, we've now seen MICA license in Europe um and there is a big one coming up uh which is the Crypto Asset Reporting Framework CARF UM or its implementation under the DAC8UM rule in the EU. So that's the trend that's really playing into our hands. Um we're going to see more enforcement, we're going to see more reporting, there's clear compliance guidelines which ultimately um we see resulting in a uh higher compliance rate when it comes to taxes. Um because right now like on average, on a global average it's below 3% of crypto traders actually doing the tax declarations um which means the potential of just the market growing, like the overall market that we address growing is insane. If that goes up to 30% and it's still only a third of people who are tax compliant that's already 10x of just like the pie that we can take a slice from. Um, so that's the most important trend uh which we thought would come sooner but now it's coming and we're still standing. So we are planning to really leverage this um, and that's going to get in uh, in effect in 2026. So we are really still focusing mostly on positioning blockbits towards this critical date being just included everywhere, being uh implemented in all those crypto as a service providers, um, having a lot of uh, crypto tax advisors using our software, just having a good positioning uh, in search engine optimization. So once those letters are flying out from the authorities um to taxpayers um, and they need a solution for it, we are the only and obvious choice. So regulation obviously is important, um, but something that we also see is that um on chain activity is massively increasing. So decentralized finance, um, it's getting more accessible. It's not such a technological barrier anymore than it was a few years ago to use decentralized finance, um, people are actually using it on a daily basis and even people that are not tech affine um can now uh, just download an app and indirectly uh use decentralized finance. What we see here is that the cost of ownership is really high. Like running those blockchain nodes. It's terabytes and terabytes of data uh, um, that you need to host. So Blockpit is really like one of the few players at the moment big enough to keep up with those technological trends. It's going to be harder and harder for new startups to find like a foothold in the market because you just need a certain size and obviously also um, resources um to just handle this which I think we've done a great job positioning ourselves um over the last years. We have a lot of established partnerships as well. We have deals um, with government agencies so authorities are using our software. It's kind of setting a standard um for this reporting format but also obviously um, results and text reports. Once you set that it's really hard for somebody else um to play in the market. So I think we are very well set up to kind of bit like a monopoly, uh at least in Europe, um when it comes to crypto tax compliance. And maybe one more trend that I also mentioned in the webinar, um is real world assets, um getting tokenized on the blockchain, um, so we're not just seeing crypto like Bitcoin, but we are seeing real estate, we're seeing precious metals, um, maybe even land ownership, um, and companies, um, shares uh being represented as a token on Blockchain. And Blockbit actually is one of those first companies that uh, from a legal standpoint put our shares on the blockchain, um four years ago already. It was a hard battle with the company registered, uh, judge. But uh, in our charter um it stands that our token or our shares can be transferred via token on the blockchain and we really see that trend coming up um, and that is something Blockbuster is also positioned to re leverage. Being a first mover in that space if it comes to a kind of a new form of transfer, uh, and liquidity for company shares.

Speaker E: Yes, that's very interesting, thanks for sharing this. Um, I'm sure that there are some listeners um, in the audience who are very eager to dive in. So uh, what is the best way to start using blockbits platform, uh, and to tap into the full potential of the, of your solutions.

Speaker C: So the good thing is um, everybody can use it for free. Um, you can get started right away, just go on blockpit IO you um, create an account, either you log in like with Google or Apple or like an email and password combination M It's also available in the App Store so just download it mobile um, and then you can get started. You connect your uh, wallets, you connect your exchange accounts and you get real time data flow into the Buckbit app and have an overview of your portfolio, of your transaction history, um, everything that could be interesting for you to know once you have set that up at some point in time um, you want to calculate your taxes or tax liabilities and maybe optimize it even. Um, so we have a lot of optimization tools as well. Then it's not free to use anymore. Um, you would have to purchase a license which starts at 40 uh, €9 a year um, to be able to generate a tax report that's ready to hand in um, with your tax declaration. But up to that point it's really free to use um, and I would urge everybody who has crypto to do that just to have a documentation. The biggest problem is that if you don't do your taxes and you don't document your transactions and in two or three years time um, you might get into trouble then going back and digging up all that data um, is going to be a hassle and potentially not even possible anymore because you can't access it. So if you create a blockbuster account and import the data completely for free, you have it there. If in two or three years um, you want to do your taxes then you can still purchase the license. You don't have to do it now. But being on the safe side by having a documentation that's completely free, I can only urge everybody to do that.

Speaker E: Yes. I would also encourage our listeners uh, who are uh, crypt traders to test and try blockbit, uh, and least have this documentation um, uh, and in general explore other uh, features as well. Florian, thank you so much for taking time to join us today. It's been fascinating hearing about the journey with blockbit. The challenges you've overcome and the, uh, really exciting future you're building. We're thrilled to be partnering with you and look forward to seeing where this journey takes both Blockbit and the broader crypto landscape. Thanks again for sharing your insights with our audience.

Speaker C: Thank you. Also, really looking forward for the months and years to come that wraps up

Speaker A: another episode of the Elevator Ventures podcast. If you like this episode, make sure to subscribe to our channel and leave us a review on your favorite podcast platforms. Also, if you'd like to to be featured, know an interesting startup or just say hi, send us your thoughts@, uh, office elevator ventures.com until next time, keep elevating your growth.