Entrepreneurs who want to make profits through (arbitrage) trading in cryptocurrencies or raise capital via an Initial Coin Offering (ICO) must not only have a good feel for the cryptocurrency market and a high level of technical affinity. They also face a tax problem that many only recognize as such at second glance: the accounting of cryptocurrencies.
The four biggest challenges in the accounting of cryptocurrencies are the following:
A commercial enterprise must always record all business transactions in its accounts. This also includes trading in cryptocurrencies or issuing its own tokens for raising capital. However, these processes are often not carried out using state currency (Fiat), but "crypto-crypto", i.e. one cryptocurrency is exchanged for another. A Fiat currency is not used here.
However, standard accounting programs require Fiat currency in order to be able to create a posting record. Thus, the accounting procedure works "Bitcoin 10,000 euros at bank 10,000 euros". However, a booking process such as "Bitcoin 1 at Ethereum 20" cannot be displayed in ordinary accounting software if a Bitcoin has been exchanged for 20 ethers.
WINHELLER offers a service that is unique in Germany: semi-automated accounting for companies that balance crypto transactions. With the help of the "CoinAccountant" software*, complicated processes involving thousands and thousands of transactions in cryptocurrencies can be automatically and legally processed in financial accounting.
The most important facts about CoinAccountant:
Support of the most important trading platforms (via API interface): Bitcoin.de, Bitfinex, Bitstamp, Binance, Binance Futures, BitMEX, Fireblocks, FTX, CEX.io, Kraken, Kraken Futures, Liquid, Okex, Poloniex, Coinbase Pro and Deribit. Additional exchanges can be included via API if desired. For exchanges that are not integrated, a manual CSV import can be performed
Processing of all crypto transactions: ordinary trades (buy/sell) - for cryptocurrency or FIAT, transfers to different wallets, derivatives and other bookings, e.g. AirDrops
Capture of all token types, including in the context of Initial Coin Offerings (ICOs)
API or manual CSV import of trades and transfers from different exchanges
Conversion into a standard CSV format that can be read into DATEV for further processing
Automatic conversion of each transaction into Euro
Automatic creation of a document for each movement
Automatic creation of a file with the holdings of each cryptocurrency on each exchange at the end of a selectable period of time
Are you interested? Then please contact us directly at +49 69 76 75 77 80 or by e-mail: firstname.lastname@example.org. We will be happy to answer your questions and provide you with an individual offer.
In order for an exchange of crypto assets to be properly recorded in the accounting, the exchanged tokens must always be converted into their Euro value. Simultaneously, the number of cryptocurrencies held by the company must be updated. This also applies if cryptocurrencies are only transferred from one company wallet to another company wallet or from/to a crypto currency exchange.
In order to correctly determine the capital gain, it is necessary to precisely track such internal movements. Since in arbitrage trading, in particular, thousands or even tens or hundreds of thousands of transactions can occur each month, the accounting software must also be able to process such a large number of transactions as automatically as possible.
Another problem with the conversion of cryptocurrencies into euros is that the smallest unit that can be represented in accounting is 0.01 euros. However, cryptocurrencies can be traded in much smaller units. This concerns particularly the stock exchange and network fees, which result from almost every transaction. These must also be documented in the accounting records.
All this becomes even more complicated by the fact that many stock exchanges and especially the internal transfer of cryptocurrencies do not issue a receipt for the transaction. However, the principle "no posting without voucher" applies, which means that companies have to create their own vouchers.
Companies that wish to use the blockchain to raise capital through an ICO must also think about correct accounting from the outset. In addition, not only the self-created cryptocurrency has to be displayed. Depending on the ICO's structure, the money or cryptocurrencies received for this purpose must also be recorded correctly as revenue or as equity or debt capital.
Special rules must also be observed when balancing cryptocurrencies generated in the context of mining, staking or the operation of master nodes.
The balancing of cryptocurrencies with the on-board resources of standardized accounting software is not feasible. It requires the right expertise in order to carry out accounting in accordance with the law and to avoid problems with the tax office later. Our crypto team at WINHELLER will be happy to assist you.
We advise your company on how to correctly balance cryptocurrencies and present them in your annual financial statements. Your contacts are
* Programmed by First Coin GmbH
Do you need advice on the taxation of cryptocurrencies? Our crypto tax experts will be happy to advise you! Please fill out our contact form for this purpose.