The US presents many obstacles to crypto companies, with a multiplicity of federal and state regulatory agencies that have actual or potential jurisdiction over the industry. Its unique political environment for crypto compared to that found in other countries has led to government skepticism, and the Securities and Exchange Commission’s highly punitive actions have made many crypto companies nervous about gaining a foothold in the US.
Despite this, crypto also has high support in the US, so many crypto companies are unwilling to abandon or postpone their entry into the US market. While there aren’t even clear and comprehensive guidelines for crypto companies in the US, there are smart strategies that can help them stay on the right side of regulators. Below, eight members of the Cointelegraph Innovation Circle share tips to help crypto companies improve their accounting procedures and compliance in the US
Use private blockchains
The obvious answer is to use private blockchains. The whole purpose of blockchain is to increase the ability to do reliable accounting at scale. Permissive access preserves privacy while reducing the cost of delivering raw data for accounting. That evidence, rather than data, can be sent to a blockchain shared with regulators. – Stephanie Zoe, Geek
Keep accurate records
After US stablecoin, Binance and Coinbase, I think it is clear that the current US administration and SEC is on a crypto witch hunt. Regulators may target companies based in the United States even if they believe they are fully compliant. Because of this, keeping accurate records of customer funds and cash movements has never been more critical. – Sheraz Ahmed, Storm Partners
Adopt a rule-based system
We have seen many crypto companies fall due to accounting issues. Adopting a rule-based system improves the situation. Established rules must be observed and followed to protect accounts. While the SEC and other major players have not specified crypto regulations, blockchain solutions ensure accountability. Therefore, it is crucial to keep clear records of customer funds and cash movement. – Elias Salvatore, Flows XYZ
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Prioritize transparency and collaboration
Crypto companies should prioritize transparency, comply with existing regulations, and work with stakeholders to improve their accounting procedures. – Vinita Rathi, Sistango
Provide P&L summaries to wallet holders
A good start would be to summarize the trades executed by each wallet and present that summary to the wallet owner in a detailed profit and loss summary. Obviously, there are issues like mark-to-market considerations, current tax laws and loopholes, but for now, providing a summary of trades and a P&L statement would be a good start. – Zane Jaffer, Zane Ventures
Implement blockchain-specific accounting software
An important step crypto companies can take is to implement blockchain-specific accounting software. It accurately tracks and records transactions and helps in tax reporting. Additionally, regular engagement with crypto-focused accountants or legal experts can help crypto companies navigate evolving regulations and ensure ongoing compliance. – Tomer Warschauer Nuni, Cryptomon
Establish regular internal audits
Implement strong internal controls and regular audits. This includes establishing clear financial policies and procedures, segregation of duties, conducting periodic independent audits, and ensuring proper documentation and record keeping. These measures help ensure accurate financial reporting, detect and prevent fraud, and demonstrate compliance with regulatory requirements. – Theo Sastre-Garau, NFTevening
Don’t wait to bring in the experts
Hiring lawyers and compliance professionals can be expensive for early-stage crypto companies, but doing so can actually reduce costs down the road. If you wait until later stages to prioritize legal and regulatory compliance, it can be overwhelming to implement best practices and fix non-compliant products. – Wolfgang Ruckerl, ENT Technologies AG
This article was published by Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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