Accountants help clients weather crypto winterby
While the value of many cryptoassets has plunged over the past month, the tax and accounting issues haven’t gone away, leading to a subtle shift in the type of enquiry fielded by crypto accountants.
Initially triggered by the collapse of the Terra stablecoin, a string of further crypto crises and wider macroeconomic factors have caused the price of many cryptocurrencies to plunge. Two of the most popular, Bitcoin and Ethereum, have halved in value since May and the entire crypto market fell below $1tn last week from a peak of $3tn in November 2021.
But while crypto investors feel the pain, accountants in the crypto space have remained busy fielding questions from clients.
Speaking ahead of a webinar on how accountants can manage clients with crypto assets, Ben Lee, partner and head of blockchain and cryptocurrency at PKF Francis Clark, said his firm was still seeing a lot of activity. “Many clients are in the space for the meaning, not the money, but a lot are wary of the market,” he said. “People want to know what’s happening with the dip and it’s worth discussing with them from a liquidity and a tax point of view.”
Adrian Markey, a chartered accountant specialising in cryptoassets, told AccountingWEB he was seeing a human response from clients similar to those shown during previous stock market downturns.
“In terms of our dealing with clients, bear markets like this give us a rare opportunity to console investors by advising on things like loss harvesting (selling projects they are convinced are dead to use the loss),” said Markey.
“For more active investors – those that buy and sell daily – this can be a very dangerous time due to the way in which the HMRC rules work (same day and 30-day rules),” he continued. “It’s complicated but regular trading in a falling market can actually accelerate taxable gains. So we always flag this to clients. What’s that saying – never try to catch a falling knife?”
Tony Dhanjal, head of tax at crypto portfolio tracker and tax calculator tool Koinly, believes accountants can play a vital role in helping clients obtain information so they can find out their true position.
“There will be plenty of accountants out there asking: ‘How can we cushion the blow for clients?’ They may be sitting on a load of unrealised losses, or have to dispose of some coins after the dip,” said Dhanjal. “I think it’s really important clients get the right advice first before they act.”
Chris Barnard, head of accounts and crypto lead at Accounts & Legal, reported seeing a subtle shift in the type of enquiries over the past few months. “Investor queries come and go,” he said, “but we’ve seen an increase in the number of enquiries about crypto projects, so it’s a different type of client.”
Markey has also seen a similar trend, albeit over a slightly longer period. “Over the last two years we’ve certainly seen more clients attracted to crypto by the DeFi [decentralized finance] market as well as NFTs [non-fungible tokens],” he said. “We’re also dealing with a few clients who are artists and turning to NFTs as a revenue stream.”
Join AccountingWEB technology editor Tom Herbert, Ben Lee, Tony Dhanjal and Chris Barnard for a live interactive webinar on How accountants can deal with clients with crypto assets at 11am on Thursday 23 June. Click the link to register and watch live or on-demand at your convenience.