The rapid growth in value and popularity of cryptocurrencies like Bitcoin has been one of the biggest financial stories in recent years. As more investors have added crypto to their portfolios, the related accounting and reporting needs have also grown exponentially.
However, effectively tracking and properly paying taxes on extensive crypto activity involves navigating a web of complex challenges that standard accountants simply aren’t equipped to handle.
That’s why partnering with a crypto accountant who specializes in blockchain transactions and virtual currency accounting could prove invaluable if you’re an active crypto trader or investing significant sums in this emerging space.
This guide will cover everything you need to know about finding the right accountant to meet your unique crypto-related reporting and advisory needs.
Do You Need a Crypto Accountant?
Before starting your search, it’s important to understand why working with a crypto-savvy accountant is so crucial in the first place compared to relying on your existing general accountant.
Tax Implications of Crypto Investments
Cryptocurrency profits you earn from trading, exchanging, or just holding through price appreciation are generally treated as capital gains by the IRS and most taxation authorities around the world.
- For U.S. citizens, you need to pay taxes on the following:
- Trading crypto to crypto
- Converting crypto to fiat currency
- Using crypto to buy goods or services
- Earning crypto through mining or staking
As you can see, virtually any activity involving crypto beyond just buying and holding can trigger tax obligations that need proper calculation and reporting.
The tax rates on crypto gains also vary significantly based on factors like:
- How long you held the crypto before selling or trading it
- The amount of total capital gains for the year
- Your tax bracket and state’s laws
With such wide-ranging and complex tax implications, having an accountant well-versed in crypto tax preparation is crucial for staying compliant and avoiding penalties, audits, or other issues with tax authorities.
Other Accounting Activities Needed for Crypto
On top of tax reporting obligations, you may need support with other accounting functions related to your crypto assets or blockchain-based business operations, like:
- Audited financial statements
- Bookkeeping and transaction categorization
- Cost basis tracking
- General ledger maintenance
- Payroll accounting if paying employees in crypto
Very few traditional accountants have the hands-on knowledge required to properly handle this kind of crypto-centric accounting work.
Benefits of a Specialist Over General Accountant
While your existing accountant likely excels at functions like tax preparation and financial reporting for standard assets, odds are they don’t have specialized expertise in areas like:
- How cryptography and blockchain transactions function on a technical level
- The evolving regulatory landscape around crypto financial reporting
- The latest IRS rules and guidance for tax treatment of various cryptocurrencies
- Granular experience actually calculating crypto gains/losses across thousands of taxable events
That’s why partnering with a dedicated crypto accounting professional who stays on top of blockchain analysis methods, crypto tax calculations, and virtual currency accounting specifics can give you total confidence that your reports cover everything needed for full legal compliance and minimize audit risk.
Where to Find Crypto Accountants
Now that you understand the value a cryptocurrency and blockchain accounting specialist can provide, here are some proven methods to find the right certified crypto accountant or CPA to partner with:
Online Directories for Crypto Pros
The quickest way to locate crypto-focused accounting professionals in your area is to search listings on sites dedicated specifically to this niche, like:
Start your search on directories like these to generate a list of qualified prospects.
Referrals From Financial and Crypto Advisors
Another great source of referrals are advisors you already work with who understand the space well, such as:
- Wealth managers
- Tax attorneys
- Crypto tax software providers
- Bitcoin accountants and auditors
Set up quick 15-30 minute introductory calls with references provided by your existing finance-related contacts to vet their relative strengths and specialties.
Search for CPAs With Crypto Credentials on LinkedIn
Expand your search by browsing LinkedIn for accountants or CPAs who list any crypto-related credentials on their profiles, including:
- Certified Cryptocurrency Investigator (CCI)
- Certificate in Blockchain and Digital Assets (CBDA)
- Blockchain Certified Public Accountant (BCPA)
Use LinkedIn’s advanced search filters to zero in on accountants with these qualifications.
These steps will provide plenty of vetted candidates with demonstrated expertise in cryptocurrency taxes and accounting. Next, you need to narrow down the list using an evaluation checklist.
Vetting and Selecting Your Cryptocurrency Accountant
Now for the fun part—kicking the tires using careful evaluation questions to land on the ideal crypto accountant to entrust your business to.
Verify Credentials and Licenses
First, validate that every accountant still has active licenses and credentials by checking sources like:
- Your state board of accountancy
- The national Association of International Certified Public Accountants directory
- The IRS Office of Enrollment directory for enrolled agents
Confirm that nothing is expired or pending disciplinary action, which would eliminate them from contention immediately.
Ask About Their Crypto Experience and Expertise
Next, discuss their hands-on track record handling cryptocurrency accounting, including:
- When they first started working with blockchain ledger analysis and crypto taxes
- Total number of client crypto tax returns prepared in the past year
- Types of cryptocurrencies they have direct accounting experience with
- Any specialty credentials like CCI, CBDA, etc.
Ideally, you want to hear they have 3+ years focused exclusively on crypto taxes and accounting. Watch out for newer advisors still building their blockchain expertise.
Understand Their Fees and Billing Approach
Get clear up front answers on how your prospective crypto accountant handles fees, including:
- Do they charge hourly or have set packages? What’s included?
- Will you be assigned other staff in addition to the lead accountant?
- What are the rates for each team member that could work on your account?
- Do they offer subscription packages or any retention discounts?
- How often is billing handled for active tax preparation and accounting work?
Having fee transparency early on sets expectations on total costs so there are no surprise invoices down the road.
Now that you’ve established their qualifications and billing practices, it’s time to probe their approach to core crypto accounting activities.
Questions to Ask a Prospective Crypto Accountant
Ready your list of probing questions to evaluate how adept your shortlist of contenders truly are in critical crypto accounting disciplines like tax calculation, blockchain analysis, and staying current.
Which Cryptocurrencies Have You Handled Before?
With over 20,000 cryptocurrencies now in circulation on public blockchains, you need confidence your accountant has experience across any tokens you own, including:
- Major coins (Bitcoin, Ethereum, etc.)
- Stablecoins (Tether, USD Coin)
- Altcoins (Litecoin, ChainLink, Polkadot)
- Lesser-known and newer coins
Ensure they’ve worked extensively with your actual holdings previously. Having direct practice across myriad crypto assets will prepare them best to handle your taxes properly.
How Do You Handle Tax Reporting for Client Crypto Activity?
Get specifics on their methodology for capturing, calculating, and presenting your crypto transactions to tax authorities, such as:
- Which accounting standards do they follow (FIFO, LIFO, HIFO, etc.)
- Do they integrate directly with popular crypto exchanges and wallets using API connections?
- What method do they use to handle exchanges between cryptocurrencies?
- How do they capture detail on coins acquired from mining, staking, airdrops, forks, and other means?
- What supporting documentation do they provide with your tax returns?
You’re looking for clear, confident responses reflecting deep mastery of real-world crypto tax preparation.
What Blockchain Analysis Tools Do You Use?
To properly account for crypto activity across thousands of taxable events, specialized software is a must-have. Get insight into their tech stack with questions like:
- Do you use a dedicated crypto tax platform? Which one(s)?
- What blockchain explorers do you use to verify transactions on-chain?
- How do you gather full transaction histories from client wallets and exchanges?
- What methods handle transfers between the client’s own wallets?
Modern solutions like CoinTracker, CryptoTrader.Tax, TokenTax, and BearTax can sync all wallet and account activity to radically simplify the accounting process. But not all advisors leverage them yet.
How Do You Stay Current on Crypto Accounting Issues?
Finally, you need confidence they actively monitor the fast-changing crypto regulatory and accounting landscape to ensure full compliance. Ask:
- Do you read latest guidance from the IRS, OECD, etc.?
- Which best practices groups and crypto accounting associations do you follow?
- What continuing education do you complete annually to stay sharp?
Their responses will reveal if they take a reactive or proactive approach staying on industry developments. You want to hear they are dedicated to ongoing education.
Thoroughly working through questions like these will make the advisor best equipped for your specific needs quickly rise to the top.
Signs You’ve Found the Right Crypto Accountant Match
As you complete your interviews, a few key signals will emerge showing you’ve landed on a true crypto accounting expert ready to deliver an exceptional experience. Watch for:
Strong Grasp of Crypto Accounting Intricacies
They display extensive knowledge answering your most probing crypto methodology questions clearly and concisely. You feel confident entrusting your complex assets to their care.
Familiarity With Leading Crypto Tax Software
They actively use and can compare sophisticated crypto accounting platforms that will ease aggregating your transaction history across numerous wallets and exchanges.
Reasonable and Transparent Fees
Their billing rates align with industry averages for your geographic region and don’t surprise you with lots of hidden gotchas or extra costs.
Clear Communication and Quick Response Times
They reply promptly to inquiries during the evaluation process. You are comfortable they will be readily available year-round as accounting needs arise.
Finding the ideal accountant to handle your crypto taxes, transaction reporting, advisory needs, and more brings significant peace of mind. Armed with the checklist above for vetting crypto accounting specialists, you’re prepared to handle this crucial search the right way.
With a true crypto tax expert supporting you for the long term, you can confidently pursue your blockchain investments and business activities knowing even the most complex accounting and compliance needs are covered completely.