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‘Tracking cost basis, fair
get them used to it and get them in the mindset of
‘This is what it is, but I have a solution, and I’m go-
ing to report supplemental information,’ the better.”
One of the board’s responsibilities is determin- value, and book value at
ing how much risk a business should take on. That
includes determining whether the strategic decision scale is very complicated for
to add cryptoassets to the books and invest in
technology to account for and track those assets is
within its risk appetite. companies, just given the
To explore and plan a digital asset strategy,
many organizations find it critical to set up working high volume of activity, and
groups with representatives from each key busi-
ness function, Jacob said. The working group is
responsible for undertaking important readiness the complexity of lot-level
and diligence efforts to ensure successful adoption
and rollout (see the sidebar “What a Digital Asset
Working Group Needs to Research”). tracking doesn’t play well

Customize for regulatory compliance with ERP systems.’
and controls
Multiple tech startups are developing software for
businesses to account for and track cryptoassets. Aaron Jacob, CPA, CGMA, who heads the ERP business at TaxBit
They include Gilded, Lukka, and TaxBit. Some
target small or private companies. Some focus on
software that is limited in scope, handling just tax
or invoicing. Some specialize in enterprise-grade,
comprehensive software designed to work with
ERP systems of large public multinationals. Look ahead
The software that helps to account for and track The software should also provide the business with
cryptoassets is relatively new and tends to require the flexibility to scale up and handle increased
customization. There’s not really much existing volume as the company’s business strategy and
infrastructure that you can buy off the shelf, products evolve, leading to more types of transac-
Loban said. tions, he added.
“There are almost an infinite number of use A private company that may become publicly
cases in the digital asset space,” Jacob said. “You traded will need an accounting and tracking system
need to see what type of transactions you’re doing, that provides U.S. GAAP-compliant results and
the protocols that you use, the exchanges that you impairment testing, along with lot-level recording
operate on, the cryptoassets that you trade in. You and tracking of cost basis, book value, and fair value;
need to make sure that you’ve got coverage for all of supports a rigorous audit process; and can with-
your use cases.” stand potential scrutiny by the SEC, Jacob said. A
But digital asset accounting software that is company with plans to expand internationally will
added to a company’s ERP system should provide need a system that can accommodate international
certain basics, Jacob said. Those basics include user along with U.S. accounting rules.
access permissions, segregation of duties for critical As the digital asset industry evolves and enter-
functional roles, two-factor authentication and prises dive into new ways of treasury management,
security safeguards, and System and Organization such as investments in decentralized platforms, it is
Controls (SOC) 1 and/or SOC 2 testing. important to plan ahead for how the software can
Controls must be robust, he said. They must be customized to accommodate the accounting, tax,
be able to be programmed, tested, and automated and reporting needs, Solanki said. Also, businesses
to identify errors and flag potential issues that need to be prepared for changes in software logic
then can be investigated, reviewed, and prevented depending on accounting clarifications that may be
from occurring prior to the publication of finan- published years after the enterprises have engaged
cial reports. in the transactions. ■

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