Frequently Asked Question

Crypto accounting software is a specialized tool designed to automate and simplify the management and accounting of cryptocurrency transactions. It enables both individuals and businesses to track their digital assets, manage transactions, and calculate taxes efficiently.

By integrating with blockchain platforms, crypto wallets, and exchanges, the software provides comprehensive insights into crypto portfolios, helping users maintain accurate records and comply with tax regulations. This automation reduces manual data entry errors and saves time, making it easier to manage digital assets and ensure financial accuracy.

A cryptocurrency accountant, also known as a web3 accountant, specializes in managing the accounting and taxation aspects of cryptocurrencies and other digital assets. They provide essential guidance to companies and individuals dealing with web3 transactions, helping them navigate the complex landscape of crypto taxation and financial regulations. With their deep understanding of tax laws and accounting standards and practices related to cryptocurrencies, including filing specific forms like Form 8949, cryptocurrency accountants enable clients to make informed decisions regarding their digital assets, ensuring compliance and optimizing tax outcomes during tax season and beyond.
Crypto Accounting Services: Costs, Benefits, and Choosing the Right Accountant

Cryptocurrency taxes works differently based on the tax agency. For example, the IRS's treatment of digital assets as property, meaning transactions involving cryptocurrencies that result in gains are taxable events. You're taxed when you sell, exchange, or use cryptocurrency that has appreciated in value, triggering either capital gains or losses.

For example, selling a cryptocurrency for more than its purchase price results in a taxable gain, with rates varying between short-term (taxed as ordinary income) and long-term capital gains. Cryptocurrency received through mining, as payment, or for work is taxed as ordinary income.

Not all interactions with cryptocurrencies trigger taxes; buying with fiat, donating to a non-profit, gifting, and transferring between wallets are not taxable events. Taxable events include selling crypto for fiat, exchanging crypto for goods or services, trades between cryptocurrencies, and receiving crypto as payment or through mining, hard forks, or airdrops.

For crypto accountants: prioritize effective record-keeping, track transactions comprehensively, maintain thorough documentation, and utilize specialized accounting software to ensure accuracy, efficiency, and regulatory compliance.

In addressing bookkeeping for cryptocurrency transactions comprehensively, it's essential to consider both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). Cryptocurrencies can be classified according to the purpose they serve within a company—either as intangible assets, inventory, or cash equivalents.

As digital asset accounting is very much a nascent subcategory or specialization of accounting, there arent many accurate and updated courses to learn. Just to mention a few:

Explore courses like the AICPA's Blockchain Fundamentals for Accounting and Finance Professionals Certificate, offering a deep dive into blockchain and cryptoassets, exclusive to AICPA or CIMA members.

The Accountant Quits Academy presents the Crypto Accounting Academy, a comprehensive course with 7 modules ending in an NFT-based certification.

CryptoCFOs  offers multiple certificate programs, weekly Crypto Tax & Accounting focused CPE, and their flagship program; Trip Around the Cryptoverse which is a 3-hour / 3 CPE accelerator that provides practical walkthroughs of many DeFi transactions.

Closing month-end for traditional accounting can be relatively swift, but for digital assets, the complexity increases significantly due to the high volume of transactions across various networks and platforms, each with unique definitions for similar transactions.

Typically, closing month-end for digital assets takes more than 10 days. However, users of Cryptoworth's crypto accounting solution, have reported being able to reduce this timeframe to 5 days or less, demonstrating the efficiency gains achievable with specialized software.

Cryptoworth is designed for a wide range of users in the cryptocurrency ecosystem, from individuals to large enterprises. Its versatile platform caters to:

• Accountants: Offering a comprehensive accounting platform for both individuals and businesses to automate transaction recognition and facilitate balance reconciliation and reporting.
• Miners: Providing tools to track and account for all mined digital assets from one wallet to another.
• Accounting Firms: Supporting accounting needs for Token, DeFi, Protocol, and Blockchain projects.
• Traders: Helping leverage multiple trading portfolios with transaction accounting features.
• Funds: Assisting in managing various client portfolios and documenting performance history.
• Enterprises: Delivering a scalable solution that meets the institutional needs of large organizations.

This makes Cryptoworth a valuable tool for anyone involved in the management, trading, mining, or accounting of cryptocurrency assets, enhancing efficiency and simplifying the complex process of crypto asset management.

Cryptoworth supports an extensive and ever-growing list of over 1000 data connections, making it a robust platform for crypto data integrations and applications. This comprehensive support includes:

• 190+ Blockchain Networks: Enabling users to connect with a wide variety of blockchain ecosystems for seamless transaction tracking and management.
• Exchanges: Integration with numerous cryptocurrency exchanges, facilitating easy access to transaction data and portfolio management.
• Custodians: Support for various custodian services, ensuring secure management and tracking of digital assets stored with third parties.
• Accounting Systems: Compatibility with mainstream accounting systems, allowing for streamlined financial reporting and reconciliation.
• AR/AP (Accounts Receivable/Accounts Payable): Tools to manage and reconcile receivables and payables in cryptocurrency, enhancing financial operations efficiency.

Cryptoworth's dedication to offering a broad spectrum of integrations is crucial for businesses and individuals looking to navigate the complex world of digital asset transactions effectively. Cryptoworth ensures that users have the tools they need to manage their financial data accurately and efficiently, underlining the importance of such comprehensive integration support in the dynamic blockchain landscape.

Contact us to enable a new integration. It can take up to 3 days*.

Cryptoworth supports a broad range of cryptocurrency exchanges, ensuring users have access to comprehensive transaction data and portfolio management tools. Among the most notable exchanges supported are:‍

• Binance: One of the largest and most well-known cryptocurrency exchanges globally.‍
  
• Coinbase: A leading digital currency platform for buying, selling, transferring, and storing digital currency.
• ‍Kraken: A US-based exchange offering cryptocurrency to fiat trading and price information to Bloomberg Terminal.
  
• ByBit: A leading cryptocurrency exchange platform that offers trading and exchange services for various digital currencies.
  
• ‍Gemini: A regulated cryptocurrency exchange, wallet, and custodian that simplifies buying, selling, and storing digital currencies.
• OKX: A global digital asset trading platform providing advanced financial services to traders using blockchain technology.
  
• ‍Crypto.com: Known for offering a wide range of features to empower users' crypto experience, including trading and financial services.
  

For a more detailed list of the 1000+ data connections and to explore additional supported exchanges, you can find more information here.

Yes, you can connect Cryptoworth to other accounting software like QuickBooks, Netsuite, Xero, and Sage. Cryptoworth facilitates this integration through APIs, allowing for seamless synchronization of your crypto financial data with your general ledger.
This feature significantly reduces manual work and streamlines the accounting and reporting process for cryptocurrencies and digital assets, making it easier to generate CSV and PDF reports or connect to an ERP solution. Cryptoworth's support for major ERPs simplifies complex accounting tasks, ensuring efficient and accurate financial management of digital assets.

Cryptoworth supports a wide array of tokens, encompassing every cryptocurrency listed on CoinMarketCap, Coingecko, and CryptoCompare, amounting to over 20,000 tokens. This extensive support also includes NFTs (ERC-721; ERC-1155), liquidity pool tokens, liquid staking tokens, and more.

Additionally, Cryptoworth employs a robust anti-spam filter to maintain clean transaction journals. If a specific token is not visible, users have the option to whitelist it themselves using the contract address, ensuring comprehensive coverage and flexibility in tracking a wide range of digital assets.

Yes, Cryptoworth offers a way to trial the services through the "Basic" plan, which allows users to explore basic crypto accounting features at no cost.

It includes 1 portfolio, 5 connections, 2000 transaction lines, along with invoices & bill management, email support, and onboarding tutorial videos.

For individuals or businesses interested in exploring features not available in the basic plan, please book a full demo with our team. This approach provides a hands-on opportunity to understand the platform's capabilities and how it can meet your specific crypto accounting needs before committing to a paid subscription

Yes, Cryptoworth is equipped to support various tax strategies, including FIFO (First-in, First-out), LIFO (Last-in, First-out), and three variations of WAC (Weighted Average Cost Averaging).

Regardless of the tax approach you decide on, Cryptoworth's software is designed to accommodate it. However, it's important to consult with your CPA or tax attorney to determine the most suitable tax strategy for your business.

Yes, you can calculate both Cost Basis and unrealized gains or losses with Cryptoworth. The platform offers specialized reports for these purposes, enabling users to accurately track the original value of their assets for tax reporting (Cost Basis) and assess the potential profits or losses on their holdings that have not yet been realized through sales (Unrealized Gain/Loss).

This functionality is crucial for effective portfolio management and tax planning, ensuring users have a clear understanding of their financial position and the tax implications of their cryptocurrency transactions.

Cryptoworth offers a suite of reports designed to cater to various aspects of cryptocurrency accounting and management. For example:
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- General Reports like the Historical Balances provide snapshots of your assets over time, crucial for understanding how your portfolio's value has changed. The Ledger report offers a detailed record of all transactions, aiding in thorough auditing and reconciliation processes.

- Calculation Reports include the Cost Basis report, which tracks the original value of your assets for tax purposes, and the Unrealized Gain/Loss report, offering insights into potential profits or losses not yet realized through sales. The Disposition Statement helps with the detailed reporting of asset dispositions, necessary for accurate capital gains calculations.
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- Journals, such as the Journal Summary By Classification, organize transactions by type or category, simplifying the analysis for specific activities. The Trial Balance report ensures that your books are balanced by listing all the debits and credits, essential for financial accuracy.

These examples are just a few of the vast array of available reports. Cryptoworth provides many more reports tailored to ensure comprehensive management, from financial flows to tax lot tracking, enabling users to maintain meticulous records and make informed decisions based on their cryptocurrency activities.

Disclaimer: This information is for educational purposes only and should not be considered tax advice. Please consult with a tax professional for personalized guidance

FAQs on Virtual Currency TransactionsProvides answers to frequently asked questions regarding the tax treatment of cryptocurrency transactions. The IRS updates this page regularly with new information or clarifications.
‍IRS Chief Counsel Advice (CCA) 202302011Guidance on the deduction for significant decreases in the value of digital assets.
Regulations on Broker Reporting of Digital AssetsAims to improve crypto tax compliance by requiring brokers to report information on digital asset transactions to the IRS and taxpayers, similar to traditional securities reporting.
1099-DA Reporting Requirements for BrokersIRS updates the draft version of Form 1099-DA for reporting digital asset transactions by brokers, planned for 2025.