Boost Your Tax Pro Practice Revenue with a Cryptocurrency Specialization
Cryptocurrency is a subject that lots of accountants are wary of. There’s good reason for that — the technological aspects of it are tough enough to understand without a computer science degree, and when you mix in the variety of opinions about its potential and impact, it makes for a very confusing picture.
As a result, being aware of cryptocurrency and actually understanding it are two very different things. That pronounced difference between understanding and awareness translates to other aspects of crypto too, like blockchain: A 2017 survey by Deloitte found that nearly 40% of surveyed senior executives have little or no knowledge about blockchain, while other executives place it among their company’s highest priorities for 2017.
It makes an interesting puzzle: how can something that’s so important for so many executives be a mystery to other peers in the same field?
One thing everyone can agree on is that cryptocurrencies have changed the payments and financial landscape permanently. That alone means that it’s crucial for CPAs to try to achieve a basic understanding of these concepts. But there are other reasons that it’s important to learn about and engage with cryptocurrency: specializing in cryptocurrency could mean big things for your CPA practice.
Growth of Cryptocurrency Investors
Anyone with even a passing interest in Bitcoin knows that it’s an incredibly volatile currency that hit a peak in late 2017 and then declined in value. Although it is still the top cryptocurrency (and the one with most name recognition) it’s increasingly possible that the performance gains seen in 2017 won’t happen again. There’s plenty of Bitcoin from early investors that have yet to hit the market when it will likely depress prices.
Thanks to this market context, Bitcoin is no longer being seen as a way to make a quick buck. It is, however, starting to be viewed through the lens of investment, with value in the long run. And this extends to more cryptocurrency than just Bitcoin.
ICO (Initial Coin Offerings) has raised over $20 billion in 2018 already, with hundreds of millions of dollars worth of tokens being traded on exchanges. The promise of blockchain technology, the potential for future unicorns (startups valued over $1 billion) in crypto-based projects, and worldwide reach, the future of cryptocurrency investments is looking healthy. For that reason alone, it’s well worth it for CPAs to understand the basics of crypto investing.
An Unknown Quantity No More
Many people – including many accountants, no doubt — still probably picture Bitcoin and other cryptocurrencies as something that was used in the shadowy corners of the dark web. But today, the IRS treats cryptocurrencies as property rather than currency for federal tax purposes. Gains and losses are taxed, and many predict crypto will be more highly regulated in the near future. The IRS reminded taxpayers last cycle that income from virtual currency transactions should be reported on income tax returns, for instance.
The Wild West days of crypto are over. This combination of increased regulation and a growing number of cryptocurrency startups means that the time is right for CPAs to start learning and specializing in cryptocurrencies and cryptocurrency investment. Those finance professionals who get in early on the cryptocurrency specializations will be the ones to benefit. By taking the time now to learn about this rapidly evolving technology, you will stay ahead of the curve and develop innovative best practices to deliver services to your future clients.
Where to Start
Understanding where to begin is daunting. Many of these concepts and technologies are only a decade old at most. The good news is, most other accountants are in the same boat. Just remember, it’s never too late to start learning. Your future cryptocurrency clients will appreciate your expertise!
Start by focusing on the fundamentals of blockchain technology. This technology is one of the most essential components to crypto transactions, including trading and investment. Understanding blockchain is one of the most important steps you can take to helping clients with cryptocurrency questions. Not just that, but blockchain does have the potential to be an accounting game-changer, according to Deloitte. Seek out experts who can help answer your questions about blockchain, so you can best help your clients. The Big Four accounting firms have also released white papers on blockchain that are worth the read: Take a look at the primers developed by Accenture.
Where there are hundreds of varieties of crypto coins in circulation, you’ll find that Bitcoin still has the market share, so brush up on its history to connect more easily with your crypto clientele. Some accounting offices have actually begun to accept Bitcoin as a form of payment. It’s a win-win: clients interested in investing in cryptocurrencies are likely to appreciate the option to pay in crypto, and this gives you an opportunity to get familiar firsthand with how to handle Bitcoin. (Plus, it’s a pretty good marketing tactic!) Of course, you don’t have to accept Bitcoin as payment to have a good understanding of it. Searching out white papers and studies on Bitcoin is a great way to learn too.
Finally, working knowledge of ICOs and other cryptocurrencies (like Ethereum, for example) are also important, particularly if you’d eventually want to specialize in cryptocurrency investment down the line.
However, you choose to begin research, rest assured that you’re doing it at the right time. By seeking to understand how your CPA practice could benefit from a cryptocurrency specialization, you’ll be poised to take advantage of future growth in cryptocurrency investments and help your clients at the same time.
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