> if one want to trade crypto currencies, is that you have to record every transaction
This is true for all capital assets. With cryptocurrencies, the data are all public. There may be room for a service which, given a set of wallets, produces a sample tax transcript.
You still need the fiat exchange value at the time of buying/selling the cryptocurrencies (unless you only assume "token for token" trades), which is not stored on the blockchain.
Fwiw IRS has a table for the FX exchange rate you can use for tax purposes for a given year (maybe date too?). We used this data for international subsidiary tax compliance for US tax reporting. I wonder if the IRS will actually able to provide such benchmark data for at least the common coins.
The IRS is usually fine with reasonable approximations. Tax lawyers and preparers are familiar with this problem; their input could inform a compliant system.
Disclaimer: I am neither a lawyer nor a tax expert. This is not legal nor tax advice. Talk to a CPA about your tax situation.
Trading done within a single exchange might only take place within that exchange's records, only interacting with the blockchain when a withdrawal or deposit is made with the exchange from the outside.
that sounds like a fun little project; way less privacy concerns than your usual tax application, as all the data is public. just a "find the data for a 1099-B for the following wallets"
it actually seems like it would be pretty easy to do if the user stayed within bitcoin and did all the transactions themselves.
Seems like it would be harder/impossible if they used a broker with a common wallet, which is I thought how most of the brokerages worked.
This is true for all capital assets. With cryptocurrencies, the data are all public. There may be room for a service which, given a set of wallets, produces a sample tax transcript.