Does your accountant “get” crypto? 5 things to consider while hiring a crypto accountant

When we first got introduced to crypto back in 2018, we admit it was novel. There wasn’t a lot of information easily available – especially for things like tax laws and crypto related accounting standards. In the last 3 years, this has changed massively. Our clients got more structured in their approach to how they deal with crypto (digital assets) in their company. They also started looking for professionals who “get” what this means.

 

A client specifically approached us because he said he wanted to work with someone who had a basic understanding of the industry and at least some interest in the sector. Collating the feedback from various clients, here’s what is considered essential for a crypto accountant,

 

Man talking to elderly woman

 

One of the early questions we were asked is whether our personnel have an interest or have invested in crypto. In our case, yes the founding team and Senior staff you’d interact with have had their personal wins and losses in the sector. This immediately puts most people at ease that we can speak their language and they don’t have to explain crypto and DeFi jargon to us.

 

It also means we understand the fundamentals of a client’s business model and can derive on knowledge from personal experiences to help work with their internal team.

 

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 from crypto assets. When looking to recruit a finance professional, always go with someone who is familiar with the day to day nuances of how they work. Such as; they should know what are wallets, exchanges, and have an understanding of blockchains.

 

If they know the technical aspects of how transactions occur on a blockchain, that is great but this is not absolutely essential for some one to be effective as a finance professional in the space.

 

This is definitely not crypto specific, but so critical for anyone in the finance field. The most common complaint from any client (industry agnostic) is that they don’t hear enough from their accountant through the year. Accountants have moved on from being merely people who pull together tax reports at the end of a financial year. They are trusted advisors who are close to changes in the compliance and tax landscape and can advise people on upcoming changes in real time.

 

This is even more sensitive for this particular industry as changes happen often and are pivotal. Bing able to advice clients consistently on things they should watch out for is highly regarded and indeed a coveted quality for any accountant in this field.

 

 

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 are 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.

 

As recent as December 2023, FASB the American accounting standards setting body issued it’s first direct accounting standard aimed at crypto assets. 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 standards to come to effect in other jurisdictions.

 

While networking is personal to a professional, it’s a good sign if the accountant attends or takes 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. It also shows an overall interest in understanding the trends within the industry and a genuine desire to connect with other people with similar interests.

 

While there no 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. We have been working with companies in the sector across UK and Singapore since 2018, if you have a question, please drop us a note and we’ll try our best to guide you.

 

 

Notes and references

 

  1. https://tax.thomsonreuters.com/news/fasb-publishes-its-first-direct-accounting-standard-for-reporting-crypto-assets/
  2. https://www.forbes.com/sites/shehanchandrasekera/2020/04/08/thinking-of-hiring-a-crypto-cpa-read-this-first/
  3. All pictures have been sourced from pexels.com and are creative commons licensed.

 

 

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