Cryptocurrency Accountancy Is Getting Simpler
Cryptocurrency accountancy isn’t the stuff that internet clicks are made of. Like traditional accountancy, however, it’s a vital part of doing business, yet one whose inner workings are a mystery to most. Even those whose business it is to know cryptocurrency infrastructure inside out, and who can cite bitcoin opcodes off by heart, struggle to define which trading activities constitute taxable events, and would have no clue how to construct a simple P&L.
Outsourcing such matters to a certified public accountant (CPA), though, isn’t as simple as it would be for an ordinary business owner. Until relatively recently, crypto-specialist CPAs were even rarer than crypto lawyers. The dearth of quality CPAs, qualified in cryptocurrency matters, can be attributed to a number of factors. For one thing, the cryptoconomy is little more than a decade old, and its mainstream awareness phase is closer to seven. It stands to reason, therefore, that the maturation of the industry and development of its infrastructure is required for a full suite of service providers to emerge.
There’s another reason why crypto CPAs have been thin on the ground, however, and that’s due to a maddening lack of clarity over digital asset classification. The opacity or, in many cases, complete absence of cryptocurrency accountancy regulations, has had even the smartest of accountants scratching their heads on occasions. Ambiguous legislation is not an excuse for lack of action, however; cryptocurrency holders hoping they could simply bury their heads and, if pressed, blame confusing regulations, will be left disappointed.
How CPAs lighten the load for crypto businesses
As demonstrated by the letters sent out to 10,000 US cryptocurrency users this month, tax agencies aren’t going to let small matters like confusing regulations prevent them from claiming their pound of flesh. Crypto bookkeeping is about much more than taxation of course. That is merely the most visible outcome of failing to account for every satoshi received, sent, spend and traded over the course of the fiscal year.
From an organizational, productivity, legal, and business generation perspective, investing in the services of a specialist cryptocurrency accounting firm makes a lot of sense. This is particularly true for SMEs, but increasingly applies to individuals who work professionally within the cryptosphere too.
Industry leaders, including Circle CEO Jeremy Allaire, have been lobbying for digital assets to be treated as a new asset class, as US politicians ponder what to do with bitcoin and its fellow cryptocurrencies. Meanwhile, forward-thinking CPAs who specialize in digital assets have been doing a stellar job of keeping pace with the ever-evolving cryptoconomy.
From DEXes to defi, it is an industry that innovates and iterates at a breathtaking pace. Streamlining its accountancy processes won’t happen overnight. Rather, it is a work in progress that will inch closer to completion as specialist CPAs advance understanding of the best practices for recording crypto assets on balance sheets. While politicians prevaricate and regulators fail to regulate, accountants are getting on with business as usual as best they can. Someone’s got to.