All Articles    |    Updates from Blox    |   CPA    |   Company News    |   Crypto Projects    |   Crypto Tax   |   Industry News

Expert Series – Sharon Yip

What was your journey into cryptocurrency like? What initially caught your attention and why?

I heard about bitcoin several years ago, but I didn’t pay much attention to it. I thought it was for people who wanted to make secret deals. A friend of mine introduced me to cryptocurrency in 2017, and out of curiosity, I decided to give it a try. I ended up getting hooked pretty quickly, as I was fascinated by the investment potential and use of cryptocurrency as well as the brilliant design of blockchain technology. Since then, I’ve become a crypto enthusiast.

When did your firm begin offering crypto accounting as a service? What specific services do you offer to crypto clients?

I started my own tax practice in early 2018, after 20 years of my career in public and corporate accounting. I decided to pick cryptocurrency taxation as my niche, to combine my interest in cryptocurrency and my knowledge and experience in tax as a CPA. Consequently, I founded Crypto Tax Advisors, LLC.

100% of my clients are involved in cryptocurrency. Most of them are individual crypto investors and many of them already have a CPA doing their tax return preparation. Due to the complexity of cryptocurrency and lack of official guidance on cryptocurrency taxation, the majority of tax professionals do not understand how to handle crypto tax compliance. I help my crypto clients mostly with their crypto transaction reconciliation and calculation of crypto trading gain or loss. I also advise clients regarding the calculation of mining income, gifting of cryptocurrency, and FBAR reporting related to cryptocurrency. I have some clients who are full time in crypto trading or in crypto businesses. I help them with entity structure and provide them with ongoing tax advice regarding their crypto activities, in addition to helping them with their crypto tax accounting and tax reporting.

Other than serving crypto tax clients, I also act as an expert coach in providing education and coaching services to other tax professionals who want to learn how to handle cryptocurrency taxation. I published an eBook called A Quick Start Guide to Cryptocurrency Taxation and created an online course called “Mastering Cryptocurrency Taxation – The Fundamentals,” both of which are specifically designed for tax professionals. In addition, I provide coaching programs to teach tax practitioners how to secure and service crypto tax clients. For more information about my eBook and my crypto tax online course, please visit my website at:

What are the top three mistakes you see crypto clients make when it comes to accounting?

Based on my experience dealing with crypto clients, I would say the top three mistakes people make when it comes to crypto accounting are:

1. Not having an understanding about crypto related tax rules

Many crypto investors have wrong impressions or no knowledge surrounding taxation of cryptocurrency activities. There are many myths circling around on the internet. A large percentage of people seem to believe the myths rather than trying to find out what is true and what is false. They don’t know how to handle their crypto accounting correctly and they often end up not reporting their crypto taxes or doing it wrong, increasing their risk of an IRS audit.

2. Not wanting to disclose all their cryptocurrency transactions

Many people still believe that crypto transactions are anonymous, therefore, compliance is not enforceable and there is no need for them to report all their crypto activities. We often have to explain to our clients that blockchain is an open ledger, and most crypto transactions are easily traceable. Enforcement of cryptocurrency reporting is not only possible but probable, and most likely easier for the IRS to do than in many other areas. Trying to hide from the IRS can lead to severe consequences, including criminal prosecution of tax evasion or tax fraud.

3. Poor record keeping

Many people do not keep track of all their cryptocurrency activities. They rely on the exchanges they traded on to provide them transaction data when they need it. However, some exchanges do not provide all the transaction data in reports their customers can download or in API import to a crypto software. Also, some types of transactions, such as ICO investments, personal crypto lending, gifting, earning crypto income, and spending cryptocurrency, can only be accounted for by using records maintained by the individual who executed those transactions. Lack of good record keeping will lead to missing data and inaccurate crypto accounting. It may also mean that businesses or individuals are not able to defend themselves when they are audited by the IRS.

What are the top three challenges when it comes to accounting for crypto?

Challenges are usually caused by the mistakes people make. The three most common challenges we encountered in crypto accounting that are not caused by human error are:

1.Crypto accounting software

People usually use crypto software to do accounting and tax reporting for their crypto activities. It’s almost impossible to do crypto transaction calculation manually, due to its complexity and the volume of the transactions. Currently, there are over a dozen crypto softwares in the market. Although each software has some unique features or capabilities, there are common issues across the board. For example, none of the software supports all the exchanges and wallets; most software cannot quickly handle tens of thousands of transactions. Most software provides only a limited number of cost basis allocation methods, and does not provide calculations for margin trades. In addition, there are very few crypto softwares capable of producing balance sheets and income statements for crypto-related activities. We believe that as the industry continues to grow, crypto software products will get better and better, and the challenges we are facing will become less and less prevalent.

2. Lack of access to transaction data

Sometimes people lose access to their transaction data, which makes it impossible to have a complete and accurate accounting for their crypto activities. Common reasons for losing access to transaction data include exchange shutdown, a crypto investment scam, unrecoverable loss of password or private key to the individual’s online account or wallet, or permanent loss of their hardware wallet.

Exchange shutdown has been a problem since the early period of cryptocurrency adoption. Some of the more famous examples of exchange shutdown include Mt. Gox, BitGrail, and Cryptopia. In the case of an exchange permanent shutdown, there is nothing people can do to regain their transaction records. Therefore, it is critical that we regularly download transaction reports from our exchange accounts so there is a complete accounting of all crypto transactions.

3. Lack of knowledge in using crypto software

Most people do not carefully read and follow the instructions for using the crypto software they chose to do their crypto accounting. They often end up encountering errors when importing, or have trouble knowing whether they have correctly and completely imported or input all their crypto transaction data into the crypto software. For many tax professionals, since they don’t have personal experience or knowledge in cryptocurrency, they don’t understand how things should work, and they cannot adequately help their crypto clients resolve issues encountered in crypto software.

No matter how good a crypto software is, if you don’t know how to properly use it, the software cannot produce a correct result.

What's the future of crypto accounting?

Crypto accounting is still in its early stages. Very different than traditional accounting, crypto accounting has unique features and requirements. Currently there is no official guidance about how to do crypto accounting correctly. We expect government agencies and accounting governing bodies to eventually step in and issue regulations and guidance about crypto accounting. We also believe that crypto software will become more and more sophisticated and comprehensive. Lastly, I believe more and more tax and accounting professionals will become educated about cryptocurrency, its related activities, and how to properly handle crypto accounting and taxation.

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on telegram
Share on email
Share on whatsapp

Ready to stake with Blox?

Introducing Blox Staking, a new service offering non-custodial staking for Ethereum 2.0.