Seldom does a person use the words “accountant” and “innovation” in the same sentence.
But Square Mile in the UK has adapted to the innovations brought by fintech and deeptech as Web3 has evolved and advanced.
The financial industry faces an identity crisis with the rapid growth in Web3 and crypto. In particular, the accounting industry has been stuck in a time capsule for decades. The trajectory makes us wonder if regular accountants will be able to keep up.
“Innovation” isn’t even used by most people within this space – the only things that have changed are the laws, rules, and guidelines. But now, with Web3 changing everything about how we work as accountants, we offer a full suite of services built for crypto and blockchain-driven businesses in the UK.
We are a strategy-first, technology enabled, human powered solution, and we believe in revolutionising how we do business!
Tax guidance and lagging regulations
As innovations in Web3 come at a rapid pace, tax and legal regulations are far behind. Each day, new types of digital assets are being created that don’t fit neatly into existing tax and regulatory frameworks. In order to understand the risks and regulations that may affect our clients, we stay on top of the latest developments in the industry, not only UK crypto tax developments, but also how global changes will likely affect the UK. Read our post on How to Report Cryptocurrency to HMRC in 2023.
Talented crypto accountants are hard to find
A major impact of Web3 on the accounting industry will be the race for talent. There is already a shortage of accountants in most UK accounting firms, but the situation is even worse in crypto.
Crypto accounting, auditing, and tax expertise is often developed through experience. We know that accounting firms need to develop a strategy to either build the expertise in-house or aggressively recruit for this scarce talent. In addition to knowledge of tax and legal regulations, crypto accountants need to be familiar with the industry’s unique infrastructure, ecosystem, and language.
New Crypto Accounting Software
From startups to large enterprises, traditional accounting software rarely handles digital asset accounting with the precision that is needed. A digital asset is generally considered an intangible asset, so the basis of the asset and price must be tracked when earned, sold, or traded.
For this detail, it is necessary to source data from several sources and apply the correct tax treatment to each transaction. Consequently, traditional accountants need to learn how to use new software tools, such as Bitwave, Cryptio, Gilded, Legible, and Lukka. Each of these software programs has unique strengths and abilities to handle the many different industry verticals within crypto.
The metaverse and its underlying Web3 technology may raise significant tax challenges
There is a hive of economic activity in the metaverse – how will this virtual world be taxed in the real world? Multinationals are already building their presence in the metaverse, aware it will be a key transactional space. Decentraland attracts around 300,000 monthly users, and Microsoft rolled out Mesh, its metaverse collaboration tool, to hundreds of millions of customers as a Teams extension during this year.
There remain significant questions over taxation in the metaverse, even though it is expected to foster a blossoming layer of commerce.We’re confident that regulatory bodies and governments are flexing existing tax frameworks to overcome metaverse challenges, and we’re staying right on the pulse.
We are ready to help you
Web3 technology may raise significant tax challenges. But it also holds the potential to place exciting new tools into the hands of tax practitioners and accountants. This helps us build a scalable finance function that you won’t outgrow in a year or two. In addition to the tactical crypto accounting, we help model out new product lines, run ad-hoc analysis and provide strategic advice. We are qualified and accredited British accountants whose goal is to be on the leading edge of financial technology and enable our clients to grow exponentially.