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Beyond bitcoin: Advising clients on digital asset diversification

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When it comes to the digital asset world, one thing is certain: There’s never a dull moment! Take, for instance, President Trump’s announcement to implement high tariffs on goods from Canada, China and Mexico. This sent shockwaves through the digital asset market, causing bitcoin to fall below $100,000. Although the value eventually rebounded, chances are we’ll continue to see extreme price fluctuations.

As the digital asset landscape becomes increasingly unpredictable, it’s important to encourage clients to diversify their holdings across sectors and digital asset types. Not only will this help with tax planning, but it will also propel you into a more advisory role. Here are four strategies you can recommend to clients to diversify their digital asset portfolio:

Purchase different coin and token types

Perhaps the easiest way clients can diversify their digital asset portfolio is to acquire different types of coins and tokens. Advise clients to start with well-established cryptocurrencies, such as bitcoin and ether. Because these cryptocurrencies have a large market cap, they’re typically considered lower-risk investments.

After that, encourage clients to consider altcoins. These are cryptocurrencies that aren’t bitcoin. Although altcoins are riskier, they have the potential to quickly appreciate in value. But be careful — their values can suddenly plummet as well. As a rule of thumb, when investing in lesser-known altcoins, clients should only put in what they’re willing to lose.

There are other types of coins and tokens that may help with diversification, including the following:

  • Stablecoins, which are cryptocurrencies whose value is tied to another asset. USD coin is a popular stablecoin that’s pegged to the U.S. dollar.
  • Security tokens, which are tokens that represent ownership or participation in a real-world asset (like stocks, bonds or real estate).
  • Nonfungible tokens, or NFTs, which are tokens that represent ownership of a unique digital item, such as art, music, animated GIFs, articles and social media posts.

Many clients will be unfamiliar with these items, so taking the time to explain the benefits and potential risks of each investment will solidify client relationships and elevate your advisory practice.

Invest in a crypto exchange-traded product

A crypto ETP is the digital asset world’s version of a mutual fund. It’s essentially a way to invest in cryptocurrency without purchasing the coins directly. Like other ETPs, crypto ETPs are securities that track the value of underlying assets. However, in this case, the underlying assets are cryptocurrencies, such as bitcoin and ether.

To help get clients started, you can recommend a reputable broker. Most major online brokers offer crypto ETPs; however, ETP types and fees will vary. Also, it’s important to educate clients on the risks of investing in a crypto ETP. One potential drawback is trading can only occur during regular market hours, meaning your client may miss out if cryptocurrency values significantly change during the weekend (which, as we’ve seen, is highly likely). This wouldn’t happen if your client purchased cryptocurrency directly since online exchanges are always open (unless briefly shut down for maintenance).

Try a crypto-related exchange-traded fund

Clients who go down this route have two options to consider: a stock-based ETF and a futures-based ETF. In a stock-based ETF, the client holds a collection of crypto-related stocks. These are the stocks of corporations that operate in the digital asset space, such as Coinbase Global, Inc. If your client decides to invest in a futures-based ETF, they will be exposed to the price movements of cryptocurrency futures contracts, which are agreements to exchange the fiat-equivalent value of a digital asset (or the asset itself) on a future date.

As with ETPs, ETFs won’t give your clients direct ownership of cryptocurrencies — they will simply own units within the funds. This could be a problem if a particular cryptocurrency or company increases in value, but that growth isn’t fully reflected in the ETF. However, crypto-related ETFs are still a great way to diversify a digital asset portfolio.

Hold digital assets in a self-directed IRA

As a tax and accounting professional, you’re probably familiar with self-directed IRAs that hold real estate, precious metals, foreign currencies, commodities or hedge funds. But did you know they can also be used to hold digital assets? There are crypto IRA platforms out there that can help with the administrative burdens typically associated with self-directed IRAs.

Advising clients to establish a self-directed IRA can be a smart move; however, setting one up that invests in cryptocurrency is often complex. In many cases, you will need to direct the client to create an LLC that’s solely owned by the IRA. After that, a checking account should be opened in the LLC’s name. The LLC will also need to acquire a digital wallet. After the IRA is funded, the plan should be directed to transfer the funds to the LLC’s checking account to purchase cryptocurrency through the digital wallet. This isn’t always needed, however, as some account managers allow the IRA to invest directly in cryptocurrency without the need for an LLC. You can help your client find a cryptocurrency exchange that allows IRAs to open accounts.

Don’t forget the tax implications

In addition to advising clients on digital asset diversification, you’ll need to ensure clients fully understand how their investments are taxed. The guiding principle behind digital asset taxation is digital assets are treated as property for federal income tax purposes. This means that every time a digital asset is sold or exchanged for goods or services, gain or loss will be recognized (subject to limitations under the Internal Revenue Code, if applicable). Some clients have the misconception that cryptocurrency is treated just like cash for tax purposes. You can clear that up and, with proper tax planning, help clients efficiently manage their digital asset transactions.

Be strategic

Navigating the ever-evolving digital asset landscape requires a strategic approach to diversification. With your guidance, clients will be able to make informed decisions, mitigate risks and seize opportunities in a dynamic market.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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