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Most common challenges of crypto accountants and CFO in Web3

Crypto diving
According to the survey 70% of accounting routine is done manually with excel forms which does not make sense in the age of artificial intelligence, machine learning and automatization of lots of processes.

Being a Web3 app we want to bridge the gap between old school tools and new challenges

We understand that cryptocurrency accounting is a rapidly evolving field due to the unique properties of cryptocurrencies.

Here are some common challenges that crypto accountants face:

  • Regulatory Uncertainty: Cryptocurrency regulations vary greatly across different jurisdictions and are continually changing. This can make it challenging to maintain compliance and understand how different transactions should be reported.
  • Volatility: Cryptocurrencies are notoriously volatile. This can lead to significant fluctuations in value, which can make tax calculations complex, particularly when considering capital gains and losses.
  • Transaction Tracking: Cryptocurrencies can be transferred across different wallets and exchanges, and these transactions need to be tracked for tax purposes. This can be challenging, especially if clients are using multiple platforms or if the exchange does not provide complete transaction history.
  • Tax Event Identification: It's important to correctly identify and record all tax events related to cryptocurrencies. However, defining what constitutes a tax event in the realm of cryptocurrency isn't always clear cut. For example, it's generally agreed that buying and selling cryptocurrency is a taxable event, but what about exchanging one cryptocurrency for another, or using cryptocurrency to purchase goods or services?
  • Valuation: Assigning a value to cryptocurrency transactions can be challenging. Many transactions are not made in traditional currencies, and the value of cryptocurrencies can fluctuate greatly even within a single day.
  • Lack of Standards: Unlike traditional accounting, which has established standards and practices, cryptocurrency accounting is still in its infancy. This lack of standardization can make the process confusing and time-consuming.
  • Anonymity and Security: Cryptocurrencies are often associated with anonymity, which can make tracing transactions difficult. Additionally, security issues such as hacking and theft can complicate matters further.

To overcome these challenges, crypto accountants often rely on specialized software that can track and value cryptocurrency transactions, maintain up-to-date knowledge about regulatory changes, and establish internal procedures for handling cryptocurrency accounting and taxation.

SMPLR is a crypto accounting platform that can offer solutions to the unique challenges presented by the intersection of cryptocurrency and accounting. Here's how SMPLR platform can help resolve these issues:

1. SMPLR can automatically track all transactions across multiple wallets and exchanges, making it easier to maintain a complete and accurate record of all transactions. This can greatly simplify the process of preparing for tax season and ensure that all necessary information is easily accessible.

2. SMPLR offers automated tools to assign a USD or other fiat currency value to each transaction at the time it occurred, taking into account the fluctuating value of different cryptocurrencies.

3. While the field of cryptocurrency accounting is still relatively new, SMPLR can provide standardization by ensuring that all transactions are recorded and valued in a consistent manner.

4. SMPLR is planning to add more features to the product. We plan to provide tools that help our clients remain in compliance with the latest rules and regulations in the future

6. SMPLR is designed with security in mind to help protect sensitive financial information.

7. With SMPLR you can generate detailed reports for income, capital gains/losses, end-of-year balances, and other necessary financial reporting aspects.

All in all, by automating and streamlining much of the process, SMPLR can greatly simplify the process of cryptocurrency accounting and help ensure accuracy and compliance. Our clients usually save from 10-40 hours per month for financial accounting and reporting routine.

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