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Crypto Firms Must Follow GAAP For Financial Reporting

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According to the articles of Coindesk and Cointelegraph, the chief accountant for the Securities and Exchange Commission has said that companies have a responsibility to follow accounting standards when working with blockchain and digital assets.

Bricker opened by stressing it was crucial for the accounting profession to keep abreast of emerging technologies to ensure it can adequately fulfil its role as gatekeeper for “issuer compliance related to financial reporting.”

He went on to emphasize that innovations in technology can in fact be “the ally of a company’s business and financial reporting activities, not their opponent”:

“It follows that changes in technology need not work against investors and the public capital markets. Moreover, companies must continue to maintain appropriate books and records—regardless of whether distributed ledger technology (such as blockchain) smart contracts, and other technology-driven applications are (or are not) used.”

Bricker emphasized that for firms and their auditors alike, the existing parameters of auditing standards and federal securities laws, with their attendant reporting obligations – where they apply – should continue to be closely adhered to.

Blockchain applications were one of the major focuses in Bricker’s speech, coming less than a year after he advocated that accountants in the U.S. get up to speed on information about cryptocurrencies and other digital assets. At the time, he spoke directly about companies or people that conduct initial coin offerings (ICOs).

 

Bricker’s focus on Monday was, once again, directed at American companies and the accountants responsible for keeping their books. He told event attendees that it is “critical that we keep ourselves informed about emerging technologies so that the accounting profession can continue to perform the essential gatekeeper function for issuer compliance related to financial reporting.”

“It follows that changes in technology need not work against investors and the public capital markets,” Bricker went on to say, explaining:

“Moreover, companies must continue to maintain appropriate books and records – regardless of whether distributed ledger technology (such as blockchain) smart contracts, and other technology-driven applications are (or are not) used.”

The SEC official exhorted corporate accountants to “take what is learned and then act appropriately” within U.S. securities statutes, whether or not their work involves keeping records related to digital assets.

“Distributed ledger technology and digital assets, despite their exciting possibilities, do not alter this fundamental responsibility,” he remarked.

Recent high-profile developments on the crypto regulatory landscape in the U.S. have seen the SEC extend its purview to oversee crypto hedge funds, FINRA muscle in on a case of alleged securities fraud, and a New York federal judge ruling that securities laws are applicable for dealing with crypto fraud allegations.

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The Financial Accounting Standards Board (FASB), a financial accounting standards body in the US, is reportedly considering whether to undertake a new initiative on digital currencies.

According to Reuters, the FASB – which sets accounting standards for publicly traded US firms – hasn’t yet decided if it will develop new guidelines for companies dealing with bitcoin and other cryptocurrencies. However, the non-profit is apparently assessing whether it should begin that process following a request from the Washington, DC-based Chamber of Digital Commerce – a trade organization for companies and groups working in the digital currency and blockchain space.

If it does undertake the initiative, the FASB would not be alone among the world’s accounting standards groups who have begun developing new frameworks. Among those is the Australian Accounting Standards Board, which in November argued for global action in this area.

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Tax Planning For Cryptocurrency U.S. Investors

Further, a group of accounting firms including PwC, Deloitte and EY, among others, formed a new coalition last year aimed at promoting new standards for digital currency. The CDC, too, has previously launched an advocacy effort, dubbed the Digital Assets Accounting Coalition.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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