Digital assets: Latest insights and resources for financial services

Companies need to weigh a range of strategic and operational considerations that vary depending on whether they offer custodial services or provide a platform for the use of cryptocurrencies or other digital assets. To be adaptable, companies need to be set up to pilot potential new products and service offerings, and be able to pivot based on what they learn from those pilots.

Companies focused on digital assets face the same risks as many other financial services organizations, but to a heightened degree. For companies that have the ethos of a startup, it makes sense that leadership teams might want to focus on getting a product to market first and worry about risks—regulatory, security and otherwise—down the line. But the wiser move is to address those risks on the front end, and establish how those risks differ between digital assets and traditional financial assets.

Companies that deal with digital assets need to balance the importance of speed to market with the fact that regulators are starting to catch up to the constantly evolving realm of cryptocurrency. It is critical for companies to keep pace with regulatory change at the federal, state and global levels.

While leadership teams at digitally native companies understand their digital assets product offerings and how this space has evolved over the years, such businesses typically operate in a fast-paced environment with limited resources to grow their accounting or other back-office functions as they scale up. Organizations need to understand how various back-office functions are affected by what’s happening on the accounting, finance and regulatory front.

As the use of digital assets proliferates and regulatory bodies continue to chart new territory, auditing for those assets presents fresh challenges. Many cases involving distributed ledgers and cryptocurrencies require thoughtful examination of basic considerations within a traditional audit framework, while other instances call for new standards and practices. 

As the use of digital assets proliferates and regulatory bodies continue to chart new territory, accounting for those assets presents fresh challenges. The Internal Revenue Service, the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, and other agencies and organizations are at various stages of issuing regulation and guidance on digital assets. Businesses transacting in digital currency should consult an advisor to ensure they understand the tax outcome of conducting or participating in an offering.