What was your journey into cryptocurrency like? What initially caught your attention and why?
I remember hearing about crypto years ago, and conceptually I loved the idea and movement behind it. Given that I am a libertarian at heart, I appreciate the concept of a decentralized currency. I bought into it ideologically and financially, and have been involved ever since.
When did your firm begin offering crypto accounting as a service? What specific services do you offer to crypto clients?
When crypto began growing, more and more people began asking questions about taxes in the Facebook and Telegram groups I was a part of. I saw this as an opportunity to not only get more involved in the crypto world, but also offer a great service. We offer US tax preparation and capital gains calculations, as well as structuring for ICOs and crypto investors. Given the changing laws and investment landscape, it’s been fascinating to follow and advise clients on the best jurisdictions and scenarios.
What are the top three mistakes you see crypto clients make when it comes to accounting?
1. Miscalculating the capital gains by not including exchanges, years, and other crucial information.
2. Choosing the wrong method of reporting such as “kind exchange,” which means no taxation on crypto-to-crypto transactions – which is no longer an option in the U.S. – or specific identification, where you choose a specific buy and sell transaction for a coin to calculate the capital gain.
3. Choosing the wrong jurisdiction for their needs. A crypto hedge fund is better to be set up in the Bahamas or Cayman, whereas an ICO would be better in Switzerland or Malta.
What are the top three challenges when it comes to accounting for crypto?
1. Lack of information and transparency from the exchanges.
2. Lack of coordination of transactions between the various exchanges.
3. There is decent software out there to help calculate gains, but it could be better and requires formatting. This process could be seamless as it is with brokerage accounts.
What's the future of crypto accounting?
I think there will be more regulation and reporting transparency among the exchanges. I do think there is a need for this, given the confusion on US tax reporting as well the various ICO frauds. Blockchain is a pivotal technology, but given the rampant hacking and fraud, I sincerely believe that it needs more advanced laws and regulations to help the long term viability of crypto.