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Cryptocurrency Accounting – A Q&A with Matthew May

By May 22, 2018 No Comments

Cryptocurrency accountingAcuity COO Matthew May has had the pleasure of leading and participating in numerous cryptocurrency thought leadership events over the last few months. Here are some of the most common crypto questions that he gets:

What are cryptocurrencies?

Cryptocurrencies aren’t all trying to be the same thing. There seem to be several categories emerging that cryptocurrencies are falling into:

Store of Value: Cryptocurrencies appear to have a large category of use cases for storing value, whether they are marketing as alternatives to gold (BTC) or silver (LTC) or even collectibles (CryptoKitties).

SWIFT: Ripple seems to be making a play to displace the legacy SWIFT system.

Currency: Some of the cryptos are focused on low transaction fees (BTC-Cash) and replacing fiat (Dash).

Kickstarter: The ethereum platform has enabled a new method of kickstarter campaigns via its utility tokens (aka ERC20 tokens). These utility tokens are getting customers to pre-fund their technology projects very similar to the campaigns kickstarter has enabled.

How do regulators treat cryptocurrency?

This seems to be a moving target so don’t forget to talk to your lawyers. It seems like the following regulators in the U.S. are falling out this way:

CFTC – commodity
IRS – property
FinCen – currency
SEC – security

Friendly reminder that the IRS are the people who got John Gotti, so make sure you are complying with the IRS rules, which seem to be the clearest of all the agencies.

What’s the best cryptocurrency accounting software in your opinion?

QuickBooks. They allow PayByCoin, they have spots for cryptocurrency in the fx module, and they integrate with Silvergate Bank – which is also crypto-friendly. I actually wrote an entire piece on this topic. Feel free to check it out here.

Quick plug: Acuity clients also get free access to QuickBooks. If you’re interested, you can learn more here, or reach out to [email protected].

What’s the best consumer tool for filing taxes that involve cryptocurrency?

What are the best business applications for cryptocurrency accounting?

Verady, Balanc3, and Libra.

Should I invest in crypto?

Maybe. The most established wealth managers are telling the most aggressive portfolios to cap their crypto exposure at 1% of their net worth.

Is it ok to leave my crypto in an exchange?

No. Exchanges are for exchanging, and that’s the only way that they should be used. They are unregulated, and, when your crypto is in an exchange, you don’t have the private key to your cryptocurrency. I recommend that anyone with over $1K in cryptocurrency use a hardware or software wallet that allows them sole control of their private key. Remember if anything happens to the exchange – “Not your key, not your coin.”

Have any other cryptocurrency accounting questions that we can help answer? Reach out to [email protected], or check out our cryptocurrency page.