Accounting Will Come to the Forefront of Blockchain in 2019

This is presented by Dr. Sean Stein Smith, CPA and Assistant Professor at Lehman College. Sean is a well known thought leader in the world of accounting, blockchain and cryptoassets. He is also a member of the WSBA Advisory Board.

As 2018 comes to a close and 2019 begins to peek over the horizon, we have a lot to reflect on, and some exciting information to share with the WSBA community. Since joining the WSBA Advisory Board in the fall of 2018 I have been continually impressed both by the caliber of dialogue, and the motivation by our members to play an active leadership role in the blockchain and cryptoasset space. With the volatility and potential for inaccurate news in the marketplace, the need for such clear-headed, well informed, and objective leadership is obvious.

This past year saw a shakeout in terms of cryptocurrency prices, with Bitcoin declining by approximately 80% at various points during the year, and this in turn leading a tumble in the broader cryptocurrency ecosystem. Declines in prices caused some in the market to doubt the validity and business use case of cryptoassets, and even the underlying blockchain technology itself; that is an incomplete and inaccurate assessment of the current state of blockchain. Some investors and speculators may have been driven out of the market, to be sure, but as some investors have left the market others have entered.

Developing and communicating guidelines, frameworks, and suggestions for how various cryptoassets should be accounted for is a challenge that needs to be addressed in 2019 for these different assets to achieve broader adoption. Some of these accounting specific issues that we will be tackling in 2019 include 1) how to classify cryptoassets from an accounting perspective, 2) how to correctly value (both initially and over time) different cryptoassets as part of investment portfolios, and 3) the audit and attestation issues surrounding the crypto space.

Additionally, as stablecoins become more widespread and more important to the wide cryptocurrency marketplace — and especially following several incidents in which the integrity of some stablecoins were called into question during 2018– a robust and comprehensive conversation around the audit and attest standards for stablecoins is something we will be focusing on going forward. For both individual and institutional investors to become more comfortable with, and trusting of, different crypto assets, the auditability of these assets must become more consistent and standardized. Stablecoins have attracted the attention of investors because they offer exposure to cryptoassets, but with reduced volatility; we have the expertise at the WSBA to help clarify and expand the attestation and assurance of these assets.

We at the WSBA intend to capitalize on both these trends as well as the fantastic array of expertise we are fortunate to have within our organization, including our valued partnerships with both the AICPA and CPA.com. Beginning this week, Steven Ehrlich and I will be co-hosting a monthly webinar that will serve a dual role as an opportunity for us to discuss emerging trends with the accounting space as it pertains to blockchain. Even more, this webinar will also serve as a forum for us to sit down and interview accounting experts and leaders.

We will also lead the development, in conjunction with our colleagues and fellow accounting members, of regular white papers and deliverables that continue the mission of providing tangible insights and actionable intelligence to the entire WSBA body. These documents will move past overviews, introductions, and frequently asked questions, and will seek to leverage the collective expertise and hands on knowledge of our membership to dive into the substantive issues that continue to come to the forefront.

As you can see, be it via webinars or other online events, publications and thought leadership pieces, or simply by the continued leadership of our members in their respective fields and positions, 2019 is shaping up to be an exciting year for the WSBA team and all of our members. I look forward to taking this journey together with all of you.

Best wishes for a Happy Holiday season.

Dr. Sean Stein Smith, CPA — WSBA Advisory Board Member