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How crypto accountants revamped a top metaverse builder’s crypto accounting operations

With Steve McGarry, Founder & CEO of SandStorm

StandStorm is a leading Web3 developer company offering a large suite of services to businesses operating on the blockchain. They build 3D Metavers renderings, offer user data services and more. They also operate an NFT marketplace, where artists can sell their art on consignment.

The talented team is remote and located across the globe. Some team members are independent contractors while others are employees. Payments were made via ACH and Stablecoins using multiple networks. As you can imagine, this was challenging to account for in their QuickBooks.

The CEO reached out to OCA for our accounting and CFO services since they were not satisfied with the current accountants. The company was using their traditional accounting firm for bookkeeping services, but since they did not understand blockchain transactions, there were many issues.

After speaking with the team and understanding their business operations and pain points we were able to implement new system processes that streamlined their accounting which saved multiple hours every week and reduced accounting errors. Let’s dive into the pain points and solutions we were able to provide.

The client engaged with the following types of onchain transactions.

  1. Selling NFT’s on behalf of others and taking a commission from each sale.
  2. Transacting with stablecoins for revenue and expense line items.
  3. Purchased digital assets for blockchain gas fees.
  4. Incurred onchain bridging and transaction gas expenses

The existing crypto accounting software was not optimized for this client’s purposes. In addition, there were many inefficiencies in the accounting process. These two main pain points lead to errors, wasted time and unreliable accounting books. This was detrimental to the businesses, as leadership was operating with materially incorrect financial information.

Here are a few examples of the issues we found.

  1. Certain transactions were not picked up by the software at all leading to missing expenses and revenue.
  2. The process was not designed to accommodate an efficient balance reconciliation to determine missing transactions.
  3. The software did not connect with traditional accounting software, requiring an accountant to make manual Journal entries every month. This process is prone to errors and wastes unnecessary time.
  4. Many spam transactions were being recorded which should have been ignored.
  5. DeFi transactions were being labeled incorrectly.

All of these issues could have been avoided with an accountant that understands blockchain transactions and implementing the appropriate crypto subledger tailored for this client type. After a few months of maintaining the clients books using their existing system, we were able to identify these issues and provide a solution.

Quote from CEO

“I highly recommend OCA. David and Aryeh are professional, reliable, and have helped us navigate the world of crypto accounting. They provided us with personalized advice, answered crypto-related questions, and gave us clear guidance on reconstructing our Master P&L. Thank you, OCA for providing exceptional service and expertise in the crypto space.”

Steve McGary CEO @ SandStorm

The solution

We changed the accounting software to a crypto subledger which was compatible with all their networks, and NFT activity. We cleaned up past transactions and created beginning account balances for all wallets. Then we created a crypto subledger with corresponding vendors and ledger accounts from their traditional accounting software.This enabled us to ensure a seamless synchronization at each month end. We then reconciled the first month and made adjustments to their digital asset account for that period’s gains or losses from disposed assets.

With the new accounting system in place, our client was able to receive accurate financial statements which reflected both onchain and off chain transactions. This enabled our client to make decisions in real time and the highest level of confidence that information was accurate. The financials included, all gas fee expenses, any gain or loss from disposition of digital assets, NFT activity and NFT sales. In addition, at year end, all the cost basis for digital assets are available without needing additional information for filing taxes.

The Results

Upon partnering with OCA, StandStorm experienced a comprehensive overhaul in their accounting processes. The tailored crypto subledger we introduced became a cornerstone, ensuring that every onchain and offchain transaction was meticulously captured and accurately reflected. This precision in financial reporting eliminated previous inefficiencies and errors, providing StandStorm with a clear and reliable financial picture.

With this fortified accounting system, StandStorm not only benefited from real-time, trustworthy financial data but also gained a significant edge in their subsequent investor round. Armed with precise and transparent financial statements, they successfully secured additional funding, a testament to the confidence investors placed in their revamped financial operations and the strategic partnership with OCA.

crypto case studies

StandStorm is a prominent Web3 developer company specializing in services for businesses on the blockchain, including 3D Metaverse renderings and user data services. They operate an NFT marketplace for artists to sell art on consignment. With a global remote team, they faced challenges in accounting, especially with diverse payment methods and blockchain transactions, until partnering with OCA for specialized solutions.

Life before Onchainaccounting

  • Complex Payment Processes: StandStorm faced challenges in managing payments via ACH and Stablecoins across multiple networks, leading to a cumbersome and inefficient accounting process.
  • Inadequate Software Integration: The existing crypto accounting software was not optimized for StandStorm’s specific needs, causing significant inefficiencies and errors in their accounting system.
  • Inaccurate Financial Reporting: Due to the lack of understanding of blockchain transactions by their traditional accounting firm, StandStorm operated with materially incorrect financial information.
  • Time-Consuming Manual Entries: The need for manual journal entries every month, due to the lack of integration with traditional accounting software, resulted in a time-consuming process prone to errors.
  • Unreliable Bookkeeping: StandStorm experienced issues such as missing transactions, inefficient balance reconciliation, and incorrect labeling of DeFi transactions, leading to unreliable accounting books.

Life with Onchainaccounting

  • Streamlined Accounting System: OnChain Accounting implemented a crypto subledger compatible with all networks and NFT activities, streamlining StandStorm’s accounting process.
  • Accurate Financial Statements: The new system enabled StandStorm to receive financial statements that accurately reflected both on-chain and off-chain transactions, including all gas fee expenses, gains or losses from disposed assets, and NFT activities.
  • Efficient Synchronization: The integration of the crypto subledger with traditional accounting software ensured seamless synchronization at each month end, significantly reducing the time spent on reconciliations and adjustments.
  • Enhanced Decision-Making: With accurate and real-time financial data, StandStorm’s leadership could make informed decisions with the highest level of confidence.
  • Investor Confidence and Funding: The precise and transparent financial statements played a crucial role in securing additional funding in their subsequent investor round, demonstrating the strategic impact of partnering with OnChain Accounting.