Being a crypto accountant sounds rather cool. When we first got introduced to crypto back in 2018, many of us thought it was novel. There wasn’t a lot of information easily available – especially for things like crypto tax law and crypto accounting standards.
In the last 3 years, this has changed massively. Our clients got more structured in their approach on how they deal with crypto (digital assets) in their company. They also started looking for professionals who “get” what this means.
Is it important to get a crypto accountant?
Speaking from my own experience, a client specifically approached EVALUA8 because he wanted to work with someone who had an understanding of the industry and showed interest in the new world of DeFi (Decentralised Finance) and Web3.
They were not looking for an average accountant that deals in generic matters. Most people within the industry understand and acknowledge that sector specific expertise is coveted because changes are fast in the Web3 and crypto worlds.
Ultimately, they need someone who will keep up with the pace and deliver results as their own businesses scale and adapt.
What things set crypto accountants apart?
A good crypto accountant is someone who “gets” crypto and Web3
One of the early questions we were asked is if we have ever dealt in crypto ourself. In our case, yes the founding team and Senior staff at EVALUA8 have had their personal wins and losses in the sector.
We realised this was a comfort factor for our clients. They realised there was no need to explain basic DeFi terminology to us, and it also meant we could understand the fundamentals of a client’s business model faster.
The more a crypto accountant understands a client’s business model, the better they will be at putting together a robust finance function. When your traditional accountant struggles to understand these things, perhaps it’s a cue to move on and find someone more embedded in your industry.
A good crypto accountant should be tech-oriented
The crypto industry is inherently digital, and transactions occur on blockchain networks. An accountant who is tech-savvy and understands blockchain technology will be better equipped to handle the challenges presented by transactions that are published on the blockchain.
If they know the technical aspects of how transactions occur on a blockchain, that is great…but in our view this is not absolutely essential for someone to be effective as a crypto finance professional in the space.
However, if they don’t have a clue about how basic business is conducted on the blockchain that might be a problem. As an example, we understand the difference between a cold, warm and hot wallet and which can be used for what kind of crypto asset holding.
If your accountant is clueless about this, they won’t be able to effectively create a treasury strategy for you. Being adaptable to new technology is not specific to just the crypto industry, this is a must have for any professional.
A good crypto accountant can see compliance and tax changes coming
While this point should be high up on the radar, this is more difficult to gauge as most business owners are unfamiliar with them. There are more and more entrepreneurs that actively seek this knowledge for the sake of their businesses and that’s always welcome.
The best way to check if someone has experience with the relevant accounting and tax rules is to ask them questions. If they’ve had experience specifically with investigations such as with HMRC, that is always a plus. You can ask them to share non-confidential details about the process and the outcome of the check.
Accountants have moved on from being merely people who pull together tax reports at the end of a financial year. Having regular catch-ups where there is open dialogue about known tax and corporate law changes can be very beneficial for the client. If there are crypto specific events like forks and halving, that’s again a pivotal point of discussion and planning.
As an example, in December 2023, The Financial Accounting Standards Board (FASB), which is the body for American accounting standards, issued it’s first direct accounting standard aimed at crypto assets.
Shockingly, many accountants are still unaware of this.
Yes, this may not impact them directly if a client jurisdiction is outside the US, but it should be seen as a forerunner of other jurisdictions’ thinking and acting in similar lines.
A good crypto accountant will have industry connections
While networking and connecting is personal to a individual, it’s a good sign of whether or not the accountant takes an interest in industry-relevant events. This could also mean they are well connected and able to contact other professionals when needed for a client specific matter. Also, it shows an overall interest in understanding the trends within the industry and a genuine desire to connect with other people with similar interests.
EVALUA8: The Crypto Accountant you can count on
While there isn’t just one specific kind of advisor or accountant that will serve the purposes of every crypto business out there, seeking out someone who works with other similar companies is a great starting point.
At EVALUA8, we have been working with companies in the sector across the UK and Singapore since 2018, so we know the market and understand your needs.
If you have a question, book a clarity call and we can talk you through our process.
References
- https://www.forbes.com/sites/shehanchandrasekera/2020/04/08/thinking-of-hiring-a-crypto-cpa-read-this-first/
- All pictures have been sourced from pexels.com and are creative commons licensed.
