Cryptocurrency is a hot item in the world of accounting. As the popularity of these decentralized currencies grows, accountants analyze how new tech and standards will change the way they work. Facing disruptions in the financial sector, professional accountants have to adapt to the ways crypto alters business practices. From education to auditing, cryptocurrencies offer new needs and challenges.
But how is crypto affecting the field of accounting overall? Has its application led to an increased need for accountants? Or will automation brought about by blockchain and AI displace accounting jobs?
How Crypto Has Affected Accounting
The cryptocurrency revolution is ongoing. As governments and world institutions increasingly become aware of digital currencies, they see the need to understand and regulate them. This has led to decisions like those made by the International Financial Reporting Interpretations Committee (IFRIC) and the Korean Accounting Institute (KAI) declaring crypto to be an intangible asset.
This status alone illustrates the needs and complexities that accountants face when managing cryptocurrency in a portfolio. Crypto isn’t just like any other currency. As an intangible, non-monetary asset, cryptocurrency falls under different rules and regulations ” especially when it comes to taxes.
Accountants have to juggle new and changing regulations within the portfolios of their clients. With crypto increasing in popularity and visibility on the stage of global trade, finance professionals have to keep up-to-date on evolving rules and tax ordinances regarding cryptocurrencies if they are to best serve their clients.
However, one survey found that 92% of professionals found their support for crypto tax and CPA guidance lacking. This leads to common errors such as:
- Underreporting of assets and transactions
- Miscalculated capital gains
- Inability to automate data tracking
Facing these problems, the need for more crypto-educated accountants is reaching a crescendo. Clients need crypto expertise, and this opens up a growing niche where experienced accountants can make a lucrative difference.
The Need for Crypto-Educated Accountants
Accounting as a field is constantly on an upward climb. The need for trained professionals to look over and manage the financial information of businesses and individuals will always be there. Even with the rise in automation, a human touch is necessary for navigating the complexities of client finances through clear communication.
In fact, the accounting sector is set to grow 6% by 2028, with accounting and auditor positions alike both in the top 15 fastest-growing jobs in America. This growth is being driven at least in part by tech developments like cryptocurrency and blockchain adoption.
Now, accountants have to answer to these changes. With the IRS sending out as many as 10,000 letters to cryptocurrency owners informing them and urging them to pay taxes on their holdings, more consumers are realizing the need for crypto expertise in managing their portfolios. Accountants can accommodate these needs through awareness and education.
For example, IRS Notice 2014-21 defines virtual currencies as property according to federal tax purposes and provides guidelines for managing these assets. Building and maintaining an awareness of every new guideline in relevant nations and for international trade requires the study of notices like this one. Additionally, accountants can undergo training courses or even invest in continuing education to secure cryptocurrency education.
Accounting experts that specialize in crypto also have unique skills to offer their clients. This means potentially higher pay and a boosted reputation as a knowledgeable financial professional. With the help of crypto, accountants can determine how clients can best invest and manage their virtual currency with their tax obligations. They can even assist clients in building and maintaining good credit through diversifying debt and investments with cryptocurrencies.
In a rapidly changing global marketplace, managing your assets for added value and security is an absolute must. Cryptocurrency increases the need for accountants through its unique position as an up-and-coming trade standard. No matter how effective automation gets, it is highly unlikely that the need for accountants will dissipate facing the novelty and complexity of these systems.
By entering the accounting sector with crypto expertise, financial professionals secure the often complex issue of crypto obligations for their clients. Facing shifting global standards, this will only become more in demand.
Shifting Global Standards
As evidenced by ongoing rulings regarding cryptocurrency regulations, we live in a world in which tech changes the way we manage our finances. In the wake of the COVID-19 pandemic, this tech is more vital than ever in coordinating global trade.
With more workers working from home and conducting business on a global scale, we need digital financial processes that can quickly, safely, and cheaply coordinate trade. Crypto offers exactly that, but accounting professionals with knowledge and training in the subject are necessary for making this technology work. Otherwise, liability issues could discourage businesses from adopting these revolutionary currencies.
Cryptocurrencies and the blockchains they operate on are changing accounting. The entire financial sector will need to adapt to accommodate these changes. In the meantime, training your accounts in crypto or becoming a crypto accountant yourself can be a lucrative decision for your business and individual finances.
