Guide

Accounting For Cryptocurrencies: How should it be done?

It is almost a decade now since Bitcoin was launched paving the way for the hundreds of digital currencies. However, the knowledge that a large percentage of people have about this industry is limited. Nonetheless, 2019 has seen the cryptocurrency and blockchain industry dominate most talks, even attracting the attention of notable figures like the President of the United States, Donald Trump.

With increased popularity and adoption of cryptocurrencies, there has been an increase in the demand of experts that can help investors manage their crypto assets. Being a volatile industry, every investor wants to minimize the risks by having their assets managed well. However, many financial advisors are still grappling to understand how they can effectively manage the assets.

Even though the cryptocurrency industry is considered difficult, accountants and other investment experts do not need to have any formal education in the industry to help them manage crypto assets. With the following tips, any accountant will be able to manage their client’s assets with ease.

Always stay updated on issues related to cryptocurrencies

Information gives you power. It will be a challenge for you to manage crypto assets if you are not aware of the developments in the industry. Accounting for cryptocurrencies requires you to be on tabs on matters such as taxation, compliance, and other regulations.

Over the last few weeks, there have been several speculations of there being new cryptocurrency rules in the USA. As an accountant helping people manage their assets, you have to keep tabs of such developments. You can create google notifications for our site, to receive all the essential updates affecting the crypto market.

Create an organized portfolio

It is crucial to have all the information you receive from investors in an orderly manner. You can categorize investors with what coins they are trading, exchange platforms, etc.  This will help you sort out new data and interpret the data.

Automate your operations

Manually accounting for cryptocurrencies can become a significant challenge because of the thousands of transactions that are recorded within a day. The cryptocurrency industry is also very volatile, and that makes it even more challenging to account for the price swings.

You should consider using software that can track all transactions and make proper records without the need for human labor. Using software reduces your work load and also improves the accuracy of your records because of a lower error-margin that they have compared to human beings.

Final take

As an investor, trading in cryptocurrency can bring you wealth or cause you high losses, and that’s why it is necessary to have your assets adequately managed. If you are an accountant accounting for cryptocurrencies, then understand that the crypto space is growing day by day and for you to become a successful asset manager, you have to learn how to keep track of all developments and be ready to learn.

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coinmag

Daniel is an experienced writer with a keen eye on emerging technologies. He aims at educating the crypto community on the developments within the space.

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