July 28th, 2020 | Updated on June 9th, 2023
When most people hear about Bitcoin and the cryptocurrency market, it’s usually regarding the price. It’s always either a matter of the price going through the roof and making certain people very rich overnight or dying on the vine. Most experts agree that the truth is somewhere in the middle.
Still, wherever the truth lies, it’s impossible to ignore that cryptocurrency job and industry growth are thriving and moving toward the mainstream, a trend that accountants should be getting on board with.
As the adoption of cryptocurrency gains steam, accounting will gain traction as policy and tax laws evolve. This is another reason why the Best CPA Exam Course For The Money will provide the latest information.
Finding New Footholds
As cryptocurrency finds new footholds in the economy, new and emerging sectors embrace it. Even universities are investing heavily in bitcoin. Yale University alone holds part of their endowment in crypto space.
And yet governments are getting into the act. Ohio accepts bitcoin for business tax payments, and Vermont and New Hampshire are considering it.
What Does This Mean For CPAs?
As cryptocurrency gains more acceptance in the mainstream, the IRS will have little choice but to get involved, which will mean that CPAs will be called on to help clients who are taking the plunge into cryptocurrency.
Further, despite business being new to cryptocurrency and still-incomplete IRS rulings on the subject, clients will require advice and tax preparation that includes blockchain tech.
Additionally, this situation will probably get even stickier after businesses begins to submit tax forms that account for losses in an effort to reduce their capital gains.
And, since there is no grey area in this, CPAs will have little choice but to become educated in the field. Fortunately, it appears that CPAs are working to stretch what was the model for GAAP around the peculiarities of the cryptocurrency market.
Interestingly, the current competition and confusion over how to account for cryptocurrency might end up being the impetus for CPAs to lead other professions as a thought leader. This is especially true when other areas such as IT still struggle with room for improvement.
Back To The IRS
The IRS already considers crypto assets as property. The same is true of many international tax entities, including the UK’s HMRC, which finds all buys, sells, and trades to be taxable events.
Both long- and short-term capital gain tax rules apply to cryptocurrency. This might be a good reason to take hold of cryptocurrency and hold on for dear life, but the government’s position on it will tell.
What About Now?
As anyone who has watched the market will say, cryptocurrency can be highly volatile. This makes accounting for it very challenging. Even accounting itself might find itself changing as cryptocurrency takes hold.
For example, inventory accounting methods such as FIFO that have helped accountants keep track of assets will probably have to change to something yet to be identified to better account for those assets and reduce liability.
These are unprecedented times for the accounting profession as it struggles to find its way in cryptocurrency.
Fortunately, just as CPAs have found ways to adapt to other business world trends, there can be little doubt that CPAs will take the lead in shaping a financial model that will incorporate cryptocurrency.
