As cryptocurrency is becoming increasingly widespread, the number of crypto users is expected to increase to more than one billion by the end of 2022. And where there’s (crypto) currency, there’s also accounting. Thus, there are millions of users out there who will need to make sure that their accounting is in proper order.

With that in mind, let us examine the current state of cryptocurrency accounting, as well as its future – what do you need to do in order to keep up with the times?

What is cryptocurrency?

In a nutshell, cryptocurrency is a digital form of money built on blockchain technology. Information on these chains is organized into blocks, including the data pertaining to all transactions. While the users themselves are mostly private, other data is transparently available.

Cryptocurrency is decentralized, meaning there’s no central authority that regulates the value of crypto. On the contrary, its value is defined by the demand among users.

The rapid evolution of cryptocurrency

The world of cryptocurrency is very dynamic. New cryptocurrencies are being introduced, while many old ones crash. More sophisticated technology is regularly changing the cryptocurrency landscape.

What we know today, may not apply tomorrow. For instance, even if you’re now aware of how to trade BTT (to name a popular crypto token), you’ll still need to keep track of the crypto market and industry in order to make a profit with BTT.

Of course, the same applies in terms of accounting for cryptocurrency.

Cryptocurrency accounting: How we account for cryptocurrencies

With crypto still being a relatively new thing, crypto accounting comes with many challenges. Crypto is an entirely different asset class, and it is unlike traditional currencies and commodities.

Any digital coin or token is a cryptoasset. Cryptoassets are mostly unregulated, but that will change soon as national institutions have their eyes on crypto.

Due to the current lack of regulations and consistency, some cryptocurrencies are held as intangible assets, while others are considered to be tangible. Intangible assets do not have a physical form, but they have a monetary value. Conversely, if an asset is tangible, it’s held as property.

However, anyone interested in accountant crypto will need to dedicate plenty of time to learn about this specific kind of accounting, especially when dealing with businesses. What’ve mentioned is just the tip of the crypto accounting iceberg.

The future of cryptocurrency accounting

As crypto becomes more regulated, this will lead to the establishment of new accounting standards. Not only will such standards make the accountants’ job much easier, but they will eventually provide additional clients for professional accountants or auditors. 

An average user will benefit from the assistance of such a professional, who will, in the future, be in a better position to provide advice. While the accounting industry has more frequently provided consultation, than compliance services, in the past few years, accountants and auditors will be able to find new opportunities to assist their clients.

According to the International Federation of Accounting (IFAC), thanks to blockchain technology, accountants and auditors will be conducting their work differently in the future. How does blockchain affect accounting? In short, it streamlines the process. There’s no need of entering data into different ledgers, and each transaction is validated by the blockchain technology.

Whether you’re a professional crypto accountant/ auditor, or a business owner who will be doing his or her own accounting, it is essential to stay up to date on the latest news and insights in this field. Expert websites such as Tradecrypto will assist you with that. Remember that cryptocurrency is rapidly evolving, so you’ll need to keep your finger on its pulse at all times.

Conclusion

When we talk about the currency of the future, we’re certainly talking about crypto. There’s no doubt that the way we handle accounting in this sector will change. 

It’s hard to say exactly how will crypto accounting look like in the future, but it’s safe to predict that the incoming standardization will be good for both users and accountants.

FAQ

What is cryptocurrency? A digital form of money, made possible by the so-called blockchain technology.

What kind of asset is cryptocurrency? It is a digital currency.

Is cryptocurrency a tangible or intangible asset? It depends on who you ask. Some accountants see it as tangible, others as intangible assets.

What does the future have in store for cryptocurrency accounting? It’s hard to predict the details, but there’ll certainly be crypto accounting standards that will make life easier for everyone involved.