100% accurate crypto accounting for businesses

What is cryptocurrency accounting?

Accounting for cryptocurrency or web3 accounting is the process of recording all crypto transactions into organized accounts on a regular basis. It ensures that records of any blockchain activity are accurate, up-to-date and comprehensive. Each type of crypto transaction, whether related to trading, staking or providing liquidity must be properly recorded.

The world of finance has been revolutionized by the advent of cryptocurrencies. As a result, traditional accounting standards such as GAAP and IFRS are being re-examined and applied in novel ways. For companies in this space, understanding the accounting principles for cryptocurrencies isn’t just a matter of compliance — it’s an opportunity to gain a competitive edge. Thus, businesses are forced to approach crypto bookkeeping on a case-by-case basis.

What challenges do businesses face with crypto accounting?

Most Web3 companies currently use manual methods to monitor transactions, wallet balances, and other on-chain activities because cryptocurrencies lack a centralized system to manage funds. These companies, including exchanges, funds, blockchain businesses, and brokers, often use multiple wallets or exchange accounts, each providing transaction histories in various formats. This diversity complicates tax reporting, as businesses must gather accounting data from numerous sources in different formats, making the process inefficient and time-consuming.

Common issues in crypto bookkeeping include challenges such as incorrect cost-basis calculations for transactions, leading to inaccurate profit or loss assessments critical for tax purposes. Other frequent problems are errors from manual entry in spreadsheets, mismatched transaction prices due to variable data sources, missed transactions from unreliable data fetching, and incorrect account and transaction labeling, all of which compound to significantly impact financial reporting and tax compliance.