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TECHNOLOGY

Digital assets, or individual instances of digital assets held. Because
digital assets are generally considered intangibles,
their book value is their cost basis less any impair-
cryptoassets such as ment charges experienced since the company
owned a specific instance or lot of the digital asset.
“Tracking cost basis, fair value, and book value at
bitcoin and ether, are scale is very complicated for companies, just given
the high volume of activity, and the complexity
of lot-level tracking doesn’t play well with ERP
projected to transform systems,” Jacob said.
Thirdly, traditional ERP systems are built
around and tailored to the nuances of traditional
global financial markets in assets, such as equities, bonds, and fixed-income
investments, and traditional accounting for cash,
accounts receivable, and accounts payable, Jacob
the next five to 10 years. said. Cryptoassets are on a blockchain. That means
they are on a distributed ledger anybody can see, in
a decentralized space, he added. “That’s very, very
different from the world that these legacy systems
were built to consider.”
Companies that operate in digital asset markets
have figured out ways to address these issues.
need tracking to account for cryptoassets quickly Founded in 2011, BitPay was one of the first
overwhelm traditional ERP systems and their payment processors to enter the cryptoasset market.
ledger technology, Jacob said. To comply with U.S. Today, the U.S.-based company processes transac-
GAAP, for example, businesses must track the cost tions worth about $1 billion per year, said CFO
basis for the digital assets they’re holding, which is Jagruti Solanki, CPA, CGMA. Services BitPay
the initial purchase price of the asset; the fair value offers include payroll payments in bitcoin; noncus-
of their holdings, which can change a lot in volatile todial wallets to buy, send, and swap cryptoassets;
trading markets that are open around the clock; and prepaid debit cards that can be loaded with
and the book value for all the individual lots or cryptoassets. The company also helps merchants

IN BRIEF

■ The unique characteristics of this cryptoassets quickly overwhelm small by engaging a crypto payment
new class of assets poses challenges traditional ERP systems and their processor or using cryptoassets for
to businesses interested in trading ledger technology. payroll purposes.
or investing in it or accepting it as ■ Companies that operate in digital ■ Before businesses take on
payment. One of the biggest hurdles asset markets have figured out ways cryptoassets, they need to gather
is that traditional enterprise resource to address these issues. Their ERP information that will assist in planning
planning (ERP) technology isn’t made systems combine off-the-shelf and a digital asset strategy. This strategy
to account for or track cryptoassets on customized software. should address, for example, the
the books, which presents regulatory ■ If the challenges of digital asset corporate risk appetite, solutions
and compliance problems. accounting and tracking seem to support tax and accounting,
■ The many pieces of information daunting, consider testing the waters regulatory compliance and controls,
that need tracking to account for before you dive in. You can start and which stakeholders to involve.

To comment on this article or to suggest an idea for another article, contact Courtney Vien at
Courtney.Vien@aicpa-cima.com or 919-402-4125.

28 | Journal of Accountancy July 2022