Yes. It’s Complicated . . . But ABC Has Answers
New Tools & Best Practices in Crypto Fund Administration, Audit, and Accounting Webinar Recording Available
Complications related to correctly accounting for digital asset transactions are compounded by the increasing number of ways to custody, trade, and interact with crypto-related financial products. Accountants and auditors manipulating large, arcane datasets manually are becoming a more and more cumbersome way to handle digital assets. The New Tools & Best Practices in Crypto Fund Administration, Audit, and Accounting webinar was designed — at ABC member request — to share best practices and provide accountants and auditors a better grasp of key workflows across crypto fund administration, audit, and accounting. If you missed the webinar a recording is available here: https://vimeo.com/349481411
Below are four takeaways to whet your appetite to watch the entire webinar:
- Manual methods to account for digital assets on balance sheets will not scale. A handful of new crypto-native accounting software solutions are coming to market to bridge the gap between traditional finance and crypto including Lumina and Triple Leo to efficiently service clients with complex crypto-centric needs.
- On the trading front, in addition to the crypto spot exchanges like Coinbase and Gemini, a number of exchanges now offer derivative digital asset financial products that clients are buying and selling. For example, BitMEX’s futures contracts and perpetual contracts are quite popular. With a funded margin account, clients can easily take long and short positions with up to 100X leverage. Deribit offers not only futures, but also swaps and options. Traditional spot exchanges like Poloniex and Kraken have also dipped their toes in the water, offering margin accounts to open short positions, and the ability to lend & borrow crypto.
- The custody front is becoming more fragmented, with clients choosing to store crypto anywhere from air-gapped machines to insured qualified custodial providers like BitGo and Anchorage. New concepts like staking adds another layer of complexity. Each staking-enabled blockchain has their own terminology, rules and procedures. Imagine trying to educate your staff and develop best practices about delegators, tickets, masternodes, bakers, rewards, voting, etc.
- Crypto-native accounting solutions abstracts complexity away. At the core of these software solutions are pipes that connect into two major data sources to extract (1) client-specific positions and transactions data and (2) asset-specific pricing data. These two data streams merge to produce reconciled transactions, which can then be leveraged directly or used to calculate a number of different downstream reports. Sophisticated crypto-native accounting systems like Lumina are able to deliver purchase/sales journal, realized report, open tax lots report, holdings report from any point in time. With the security master and chart of accounts enabled, accurate profit-and-loss and balance sheet statements can also be generated.
For more information about joining the Accounting Blockchain Coalition click here.