Crypto isn't going away, no matter how much you ignore it
A version of this story first appeared in The Net Gains newsletter. Sign up for free here to get it delivered to your inbox.
By Janet Berry-Johnson | for The Net Gains
Dealing with your client's crypto transactions can feel like a tangled mess of wallets, blockchains and tax headaches. No wonder some accountants would rather pretend it doesn’t exist. But here’s the reality: cryptocurrency isn’t just a passing trend. Ignoring it means missing out on a massive opportunity (or, worse, leaving your clients at risk).
The Net Gains reached out to Derek Wride, founder of CPAI, an AI-based crypto accounting tool, to learn more about it. If you’re still on the fence about crypto, this one’s for you.
Why do you think some accountants dismiss crypto, and what do they risk by ignoring it?
Blockchain fundamentally differs from traditional finance, making it overwhelming for many accountants. It lacks the familiar structures and processes of traditional transaction statements and accounting. Instead, transactions can happen across multiple wallets, exchanges, blockchains and DeFi protocols, often with much left up to technical comprehension and interpretation. The sheer complexity, unfamiliar terminology, evolving regulations and the need to track cost basis across fragmented data sources pushes many accountants to avoid it altogether.
The risk? Crypto is not going away. More clients will need expertise in this area. Accountants who misreport crypto transactions, whether through ignorance or avoidance, put their clients at risk of audits, penalties and legal trouble.
How is cryptocurrency impacting tax reporting, compliance and financial statements, and what do accountants need to know to serve their clients effectively?
Crypto disrupts traditional accounting in three major ways: Tax reporting. Most transactions can trigger a taxable event, from trading and staking to liquidity pool rewards and airdrops. Unlike stock sales, crypto transactions don’t have built-in cost basis tracking, requiring accountants to piece together transaction histories across hundreds or even thousands of records. Compliance. Regardless of administrative changes, the IRS and regulators are catching up, introducing new rules and audits specifically targeting crypto holders. And financial statements. Crypto isn’t inherently treated like cash or stocks; it’s currently considered property. Businesses and serious traders have the added complexity of navigating volatile price swings while ensuring they meet evolving accounting standards.
How can accountants get up to speed on crypto accounting?
Learning crypto accounting isn’t always as simple as taking a CPE course. It requires hands-on experience, the right tools and a willingness to rethink how transactions are tracked and classified.
Accountants can get up to speed by using crypto-specific accounting platforms that pull on-chain data, automate cost-basis calculations and reconcile transactions across multiple blockchains. They should also connect with crypto-savvy professionals who already specialize in it, whether through LinkedIn, industry groups or direct partnerships.
Crypto accounting isn’t just difficult; it’s fundamentally different. Those who invest time in learning it will gain a competitive edge, while those who ignore it will struggle to stay relevant.