Tell us a little about your story and background, as well as what you work on now.
After earning my graduate degree in Financial Accounting, I launched my career at Friedman LLP. I started working primarily with public companies in the emerging technology space and my clients often aimed to raise capital through debt or equity transactions to perform initial public offerings, mergers or acquisitions. Nearly 3 years ago, I began immersing myself in projects within the digital currency space. I gained significant industry knowledge from existing clients and through building new relationships with entrepreneurs in the industry. I have assisted clients in interpreting the accounting and tax guidance to stay compliant with the current rules and regulations in place for accounting, auditing and taxation for digital asset and distributed ledger companies. As one of Friedman’s dedicated specialists, I am tasked with building our digital currency practice and am proud of the critical work we have achieved over the past few years.
How have you seen the regulation and accounting sector change over the past year or so with new emerging technologies?
As more money and interest continues to push into the digital currency space, regulation will become more important. Agencies like the SEC, PCAOB, IRS and AICPA will begin to develop more definitive guidance around this unique asset class and transaction within the asset class. Currently, there is no bright line for a lot of what we are seeing. Until agencies are able to further evaluate, understand and develop definitive guidance themselves, the best approach is to leverage current guidance and apply it to specific situations based on analogy. Overall, the U.S. has effectively kept professionals in the space informed of significant events. Additionally, refraining from giving premature guidance has avoided the issue of potentially overwriting it once the industry is better understood in the future.
Can you explain how accounting gets more complex as you introduce crypto assets into your portfolio?
Cryptocurrencies are a unique asset class. Since there is incredible uncertainty around regulations and guidance, people fear making mistakes. However, similar regulations and laws around these types of transactions are already in place and it is truly a matter of interpreting the existing guidance and using that as a reference for current trends in the asset class. I think blockchain is going to revolutionize the auditing world through real time auditing abilities on a decentralized ledger, which could automatically approve transactions based on actual occurrence with the use of smart contracts. The ability to audit through a blockchain can make it easier to verify transactions, move reliance away from the auditors substantive testing and allow companies to be more transparent with the users of the financial information. I also think the concept of blockchain will make internal controls around cyber security in all companies extremely important.
People everywhere are freaking out about upcoming tax seasons. Do you have educational advice for people who do their own taxes?
If you made a profit on cryptocurrency, you should pay tax in accordance with the IRS or other jurisdictional requirements. The task of tracking trades may be daunting, but it’s the taxpayer’s responsibility to make their best effort ensure they pay tax on any realized gains incurred during the year. The most difficult aspect of this is to make sure you are tracking cost basis and sale proceeds in accordance with what the IRS considers an appropriate accounting method.
What resources do you use now to stay updated (podcasts, books, blogs, etc)?
Numerous media outlets provide great information on digital currency and blockchain news, events and education. I subscribe to a variety of different newsletters like Coindesk, Bitcoin Magazine, and The Daily BIT. I also use Twitter and LinkedIn to stay on top of trends. Additionally, the team at Friedman regularly attends conferences and seminars on a weekly basis to network and stay current in the industry.
Where/when did you first hear of cryptocurrencies?
I first learned about Bitcoin in 2010; however, what it was or how the underlying technology played a role was foreign to me. In 2014, Friedman retained a new client that was very involved and heavily invested in Bitcoin. I was eager to work with the client and began to research and understand how digital assets and distributed ledger technologies worked. This passion evolved into spending a significant portion of my time learning about how blockchain technology would impact all areas of business and how new digital assets that were coming into the industry would shape the economy. From there, cryptocurrency markets began to skyrocket and so did our client base. I began to focus more and more of my time on getting involved in a variety of groups that encouraged learning and innovation with the digital currency community.