Connect with us

Accounting

Cryptocurrency CPAs race to prepare clients for end of universal wallet accounting from IRS rule change

Published

2 years ago

on

Accountants in the cryptocurrency arena have been busy preparing their clients for what they characterize as a seismic shift in digital asset reporting before the safe harbor provision ends in January. 

IRS Revenue Procedure 2024-28, released in June, effectively ends the longstanding practice of “universal wallet” reporting, where people could account for their digital assets, especially cryptocurrency, as a combined pool. Under the new rules, which go into effect at the beginning of next year, people will now need to report their holdings on an account-by-account basis. Zach Gordon, founder of cryptocurrency accounting firm Red Five, called the change “monumental.” 

“You’re talking about going from the universal wallet concept–which is imperfect without a doubt but something we can handle today–to what is, in essence, specific IDs, where every wallet needs to be treated as its own universe for tax purposes. This is a huge change, and considering how a lot of these reporting infrastructures, even on the transactional level, were built out, it’s not ideal,” he said.

Crypto tax

To illustrate, according to Gordon, consider an entity that runs a trading algorithm with many microtransactions, hundreds or even thousands per day and possibly millions per year. Accountants will need to capture all of those transactions, trace their paths through specific wallets, and identify what is and is not taxable through it all, which theoretically can be a very time consuming process. 

The degree of ease or difficulty of helping a client through this, said Gordon, comes down largely to their overall due diligence or “wallet hygiene,” which could best be thought of as maintaining certain habits to security, privacy and effectiveness of one’s accounts. This could include tracking things like which wallets serve which purpose, which assets are held in those wallets, who has custody of them and who controls them. While these things are often on a public blockchain, and so technically auditable, it won’t always be easy. 

Pat Camuso, founder of digital asset-focused accounting firm Camuso CPA, noted that assisting clients through this change is basically a matter of tracking and tracing assets through identifying the relevant data and drilling down at the transaction level on an asset-by-asset basis. This allows them to track the flow of funds so as to, ultimately, map the client’s accounts, everything in them, and what assets are inbound and outbound. He said it’s kind of like being a forensic accountant. 

“It takes a lot of digging, a lot of piecing together, just a tangled mess of a puzzle every time. And now this revenue procedure requires that whole tangled mess to be accurate,” he said, noting that today most just try to determine gains or losses and move on. 

If someone has already been practicing proper wallet hygiene, these engagements won’t be that difficult to get through. Unfortunately, many do not. For instance, both Gordon and Camuso noted that it’s not just possible but common for people to literally forget about a wallet and lose track of just how many they have. 

“I was just looking at an account from before, we’ve been doing their accounting since 2017, and there was a painful reconciliation process that covered maybe 12-13 wallets they didn’t tell us about, and several exchanges as well,” he said. 

Because the new rules increase complexity, the engagements will become more complex, which means they will take longer and cost more. But given the difficulty of navigating the labyrinth of assets held by some clients, Camuso said there’s not much other choice. 

“[You’ll need to be] going asset by asset, down a whole list, and ensuring that everything is allocated right. You may have 25 lots of Ethereum and now we have to snapshot your wallets and allocate them appropriately to each wallet, so with that level of complication, yes, that will increase fees,” he said. As for ongoing maintenance, “it has always been that tangled mess and fees have always reflected that as a result, because there is no way around that.”

Gordon, from Red Five, noted that even just scoping these engagements out have become a little more challenging—while many CPAs are moving away from the billable hour, he said it can sometimes be a struggle to determine a fair estimate for this work. However, he said he is less concerned about the economics of the matter than he is about the timing, as there’s a lot to do and not much more time to do it. 

“It seems like everything takes way longer. There’s way more stuff to do and the deeper you get the more challenging it gets to come up with the right answer. It depends on the platform. There’s the large institutional ones, and they’re going to be okay, they will figure out a way to make sure we’re ramped up and ready to go, but there’s some of the newer [blockchains] out there, the newer platforms are working hard but these standards are very hard to maintain,” he said. 

Camuso added that many of the accounting solutions used for cryptocurrency have been coded with the universal wallet methodology in mind, and many of them have not yet adjusted to the new rules, with a few exceptions. 

Ledgible, a cryptocurrency solutions provider, is one. CEO Kell Canty noted that users have always been able to select either a universal wallet or account-by-account approach, meaning that the only real change that had to happen was disabling the former option. Making the shift, though, may not necessarily be as easy as clicking a button. Canty said that the difficulty and complexity of the operation depends entirely on the user, there is no one size fits all. Some have exhaustive books and records and rules on how they document and approach allocations, and so won’t have much difficulty; others are a little less fastidious, and so may have a more difficult time. 

Canty added that another major challenge is that there are a lot of people, some of whom may not be as sophisticated as others, who either know very little about the change or don’t even know about it at all. Something as big as this, he said, you’d think they’d be more aware, but many don’t really think much about taxes and how they’re calculated until around April or October. It’s been a tumultuous year and people’s attention is being pulled in a lot of direction, he said, and this is a very intricate and complex change, so those who aren’t professionals won’t necessarily know to look into the implications of this. 

“It will be an education process. Not just among our own users but universally for the [professionals] and platforms to educate what it will mean on a going forward basis and how the safe harbor only exists up until January 1,” he said. 

As for Ledgible itself, he said they’re gearing up for customer service because they think they will soon be getting a lot of requests from users who suddenly become aware of the change. He noted this is more complex for the average used, and what’s more they’ll have to learn about it in a compressed timeframe, which he said might cause more confusion. Ledgible is also planning for an information campaign to help users understand what is happening and why. 

“It’s a little difficult to get casual users interested in the intricacies of tax regulations, but we will try,” he said. 

Compounding the challenge is the fact that while the shift from universal wallet to account-by-account reporting is the most prominent new rule, it’s not the only one. Another big change is first-in-first-out now becoming the default methodology. For years, many cryptocurrency holders preferred a highest-in-first-out methodology, which tended to produce better tax outcomes. Switching to a FIFO default methodology could have tax consequences for those who have meticulously structured their assets the other way, said Gordon. But he added that this will be a difficult thing for the IRS to enforce and wondered whether it might later permit other methodologies like last-in-first-out. 

“If you’ve been around this industry long enough, you know that enforcing something like this is challenging because you’re dealing with a lot of unique transactions … For certain groups or individuals, LIFO might make more sense for those who are very detail oriented while specific identification might make more sense [in others],” he said. “FIFO being the law of the land is potentially a big deal and I can see there being pushback from those who are trying to file compliantly, and at the same time there are also potential tax consequences as well.” 

Camuso noted that this will also require users with multiple wallets to be more meticulous in how they structure their assets. 

“Now in 2025 they’re creating a scenario where you can’t just plug your transactions in and pick the highest cost and call it a day–you must manage funds appropriately and flow of funds must match capital gains calculations. … It is to eliminate this idea of cherry picking the highest cost basis,” he said.  

When asked about the best practices they’ve found in helping clients through this situation, both Camuso and Gordon had similar advice: maintaining accurate records, both on the part of the client and the firm. Camuso noted that making sure the calculations are accurate up to that point is really half the battle, if this is covered then the allocations will not be very complex. Meanwhile, Gordon said it’s vital to understand all the wallets involved, what transitions are related to each of them, and making sure records are updated regularly. Preparation, overall, is key. Of course, this might be a tall order in October. Stil, Camuso said it’s important to make clients aware of this and to impress upon them it’s much better to do this before the Jan. 1 deadline. 

“To the degree that someone does not follow up with me before Jan. 1, the big thing is that deadline. It’s not even Jan. 15, it’s Jan. 1. If someone is lackadaisical and overlooks that, it won’t be a good sign. Then there becomes the question of what we will do next year,” he said. 

Related Topics:
Continue Reading

Accounting

SEC’s Semiannual Reporting Proposal Faces Investor Pushback: What CFOs Need to Know

Published

20 hours ago

on

August 25, 2026

By

U.S. Securities and Exchange Commission (SEC)

A proposal from the U.S. Securities and Exchange Commission to potentially shift some public companies away from quarterly financial reporting toward a semiannual model is drawing significant pushback from investors, even as it continues moving through the regulatory process. The debate has direct implications for corporate finance teams, auditors, and the broader transparency of U.S. capital markets.

What the SEC Proposed

According to a summary published by accounting advisory firm Cohen & Co., the SEC issued a proposed rule on May 19, 2026, aimed at simplifying financial reporting requirements for many U.S. public companies. The proposal would potentially reduce the frequency of certain mandatory disclosures from quarterly to semiannual, a structural change that has not been made to core U.S. reporting requirements in decades.

The proposal follows an extended debate within U.S. policy circles, with proponents arguing that reduced reporting frequency could lower compliance costs and free up management time for longer-term strategic planning rather than quarter-to-quarter results management.

Why Investors Are Pushing Back

Comment letters submitted in response to the proposal have been extensive, and according to Cohen & Co.’s review of the public record, investors “appear to be largely opposed” to the shift, viewing frequent interim reporting as a core benefit of U.S. capital markets relative to other jurisdictions.

Accounting and law firms have taken a more measured position, generally urging any changes to remain aligned with the Financial Accounting Standards Board (FASB), whose existing disclosure requirements and guidance are built around a quarterly reporting cadence. A shift to semiannual reporting without corresponding changes to FASB guidance could create friction between SEC filing requirements and GAAP-based disclosure expectations.

Lessons From the U.K. Experience

The debate is not without precedent. The United Kingdom moved away from mandatory quarterly reporting for listed companies in 2014, returning to a semiannual disclosure requirement. According to Cohen & Co.’s analysis, that experience offers a cautionary data point: there was no measurable increase in capital expenditure or R&D investment following the change, while analyst coverage of affected companies declined as reliable interim information became less available — a particular risk for smaller and newly public companies that rely on analyst coverage to maintain investor visibility.

Practical Implications for Finance Teams

Beyond the debate over disclosure philosophy, the proposal carries practical complications. Many companies have debt covenants and credit agreements structured around quarterly financial delivery; a shift to semiannual reporting could require renegotiating those terms. Reduced reporting frequency would also extend the “window of market silence” between disclosures, a factor that governance and investor-relations teams would need to manage carefully to avoid information asymmetry.

Separately, and unrelated to the reporting-frequency debate, the SEC and FASB have continued finalizing more routine updates this year. New Accounting Standards Updates are taking effect for December 31, 2026, fiscal year-ends covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation, according to Eide Bailly’s review of 2026 ASU activity. Additional guidance on paid-in-kind dividends and environmental credits is also on the near-term horizon.

What to Watch Next

The semiannual reporting proposal remains in the comment and review phase, and no final rule has been adopted as of this writing. Finance leaders should monitor the SEC’s regulatory agenda for further movement, while treating the current quarterly reporting requirement as the operative standard until any final rule is issued and an effective date is set.

Given the extent of investor opposition documented in the comment file, a full shift to mandatory semiannual reporting appears more likely to result in either a scaled-back compromise or continued study rather than swift adoption — though the SEC’s ultimate direction remains uncertain.

 

Continue Reading

Accounting

AI-Driven Automation and Continuous Accounting Frameworks

Published

2 weeks ago

on

August 15, 2026

By

The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

Continue Reading

Accounting

Global ESG Reporting Standards and Double Materiality Compliance

Published

2 weeks ago

on

August 9, 2026

By

Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

Continue Reading

Trending