Dr. Sean Stein Smith, CPA, City University of New York-Lehman
| March 12, 2021
Cryptocurrency continues to develop and evolve at an accelerating rate, and it can be difficult for even the most motivated practitioner or business professional to keep pace. No single article, no matter how comprehensive or well-written, is going to be able to encapsulate all the changes in this fast-moving sector. That said, there are a few big-picture trends and developments that every CPA should know. Clients, both now and in the future, are increasingly going to expect practitioners and advisors to be well informed on these issues, so let’s look at some of these trends:
- Crypto has gone mainstream. Cryptocurrency and blockchain might still seem like an abstract or conceptual idea for many practitioners, but that is rapidly changing across the economy. Major institutions, notably Tesla, have invested billions in Bitcoin, but that is only part of the story. The announcements by major payment processors and credit card providers, such as Visa, Mastercard, Square and PayPal, mean that crypto payments and the utilization of crypto as a legitimate alternative to fiat option is a trend that every practitioner will have to stay on top of. Specifically, what will the audit, compliance, tax and reporting implications of this increase in crypto payments be?
- New applications are here. There are many new applications that have been developed in the blockchain and crypto asset space just during the past year. Ideas and concepts like decentralized finance (DeFi) and non-fungible tokens (NFTs) were definitely not in the mainstream financial conversation before the last several months. With DeFi attempting to replicate banking services without banks, and NFTs seeking to monetize digital and physical assets via a blockchain connection, these concepts are certain to generate numerous accounting questions in 2021 and beyond. These are just two of the highest-profile applications of blockchain technology, and it will be critical for the profession to stay up to date on these fast-changing trends.
- Regulation is catching up. Perhaps most refreshing is the progress that seems to be being made from a regulatory perspective, especially in the United States, which had been lagging behind some other jurisdictions in developing proactive and innovative approaches to help support this rapidly growing sector. Specifically, the updates from the Office of the Comptroller of the Currency (OCC), which enable federally chartered financial institutions to participate in the buying, selling and confirmation of certain crypto transactions; the potential appointment of an SEC chair well versed in crypto specifics; or the pronouncements by the Federal Reserve pertaining to significant interest in a crypto-dollar project, are emerging trends.
Blockchain and crypto assets are, without a doubt, quickly becoming part of the mainstream financial conversation and are topics that all companies need to be well versed in as these trends continue. For more information and content on blockchain, crypto and other emerging technology trends, tune into the NJCPA TechTalk Podcast and join the NJCPA Emerging Technologies Interest Group.