Without proper digital asset management that accounts for the complexity of crypto and Web3, businesses can become exposed to a multitude of risks that lead to costly setbacks, failed opportunities and a loss of revenue.
Due to the increasing popularity of cryptocurrency, there is a need for specialized accounting processes that address the uniqueness of these transactions. As experts in helping businesses overcome the challenges of crypto, we’ve outlined some key points you need to know about digital asset accountants.
Things to know about digital asset/crypto accountants:
- What is digital asset or crypto accounting?
- What does a digital asset or crypto accountant do?
- What are the benefits of hiring a digital asset or crypto accountant?
- When should you hire a digital asset or crypto accountant?
What is digital asset or crypto accounting?
Digital asset or crypto accounting is the process of tracking, analyzing and recording financial transactions for tokens and cryptocurrencies.
To effectively manage their crypto accounting processes, many businesses choose to integrate crypto accounting software or engage the services of an experienced accountant to help ensure compliance and develop the proper financial management procedures.
Common digital asset and crypto accounting management activities:
- Crypto Bookkeeping: Executing accounting duties, performing crypto reconciliations, and developing monthly reporting.
- Crypto Software Implementation: Leveraging crypto ledgers, token management software and crypto accounts payable solutions to improve operational efficiency.
- Audit Readiness: Analyzing risks and documenting processes and controls to prepare financials for auditor review.
- Strategic Advisory: Creating a successful foundation for financial and operational scalability, providing leadership with more time to manage growth and prepare for the future.
- Financial Modeling & Cash Forecasting: Utilizing financial modeling and analysis to provide an understanding of cash runways and the trajectory of the business.
What does a digital asset or crypto accountant do?
Digital asset or crypto accountants are financial professionals who specialize in providing accounting services specifically tied to cryptocurrency and blockchain technology.
From transaction tracking and reporting to ensuring compliance with today’s laws and regulations, crypto accountants combine traditional accounting principles with specialized knowledge of cryptocurrencies to help organizations successfully navigate the unique challenges of the crypto space and gain valuable insights into the scope of their assets and how they should best be utilized.
Skills and duties of digital asset accountants:
- Selecting and implementing crypto accounting software and ensuring all users are properly trained
- Ensuring the accounting is aligned with the tax strategies developed by the CPA firm or tax/legal advisors
- Preparing your team/employees/company for a successful audit
- Researching and documenting crypto accounting issues and applying crypto accounting standards
- Providing strategic financial insight for blockchain ventures
- Optimizing accounting workflows to provide faster financial closes
- Structuring financial statements for managerial reporting and KPI development
- Documenting processes and internal controls to identify areas of improvement and establish a plan of corrective action
What are the benefits of hiring a digital asset or crypto accountant?
- Definition and implementation of innovative digital asset solutions built for scale
- Digital asset processes that can handle millions of transactions
- Visibility into your cash runway, powered by deep expertise in forecasting and financial modeling
- A deeper understanding of tax implications as they relate to your business
- Audit-ready financials prepared for your CPA firm, reducing the complexity of the process
- Collaboration with tax, legal and other advisors for an integrated crypto strategy
When should you hire a digital asset or crypto accountant?
If you’re having trouble successfully navigating the labyrinth of complex crypto accounting standards, are experiencing inaccuracies or incompleteness in your financial statements or reports, or are simply looking for some help with filing your tax return, hiring a digital asset or crypto accountant is key.
Whatever your needs, digital asset or crypto accountants will act as a trusted partner to your business by stepping in to identify the right opportunities and conduct the necessary due diligence to help you make informed decisions and strategically prepare for the next stage of growth.
Signs it’s time to hire a digital asset accountant:
- You’re getting ready to file your tax return and need to account for cryptocurrency.
- You’re managing cryptocurrencies via spreadsheets instead of a crypto ledger system.
- Tracking and monitoring cryptocurrencies is too complex or time-consuming.
- There are inconsistencies in your control processes.
- You’re gearing up for a financial audit and don’t have the necessary crypto accounting standards or reporting processes in place.
- You don’t have anyone on your current team who understands the complexity of crypto accounting.
- There are inaccuracies or incomplete items within your financial statements and reports.
- Your business is growing rapidly and you simply don’t have the time to develop effective crypto accounting processes all on your own.
Need Help Managing Your Digital Assets?
Kranz’s digital asset experts deliver scalable crypto accounting solutions and strategic financial insight for blockchain ventures. Whether you are an L1, L2, DAO, or if you deal with DeFi, NFTs, staking or crypto infrastructure, we work with you to define and implement innovative solutions that can scale with your business, produce audit-ready financials and deliver business insights.
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