Digital Asset Accounting, Audit & Tax Reporting | Boston Blockchain Week 2026

Thank you, Ian. It's It's definitely great to see that the room is uh still full. We didn't suffer too much attrition when the dangerous accountants get on the stage

and a lawyer.

Again, Anthonyello, tax partner at BDO and also the national tax leader for digital assets at the firm. And I'm joined by my esteemed friends and colleagues in the industry, Raj, Kevin, and Mark. I'd say collectively we probably have about a 100red years of work experience in accounting and you know close to probably 30 to 40 years focused in digital assets. And just to set the stage, it's our job to help and support our clients, you know, staying up to date on the regulatory bodies that impact, you know, the the accounting profession, whether it be Treasury, IRS, AICPA, PCO, BASBY. Um, and you know, when guidance is released, right, new rules, it's our job to help our clients understand how to implement those rules.

In most cases, what we've seen over the years, those rules are uh tend to not exist. Things could be gray, right? Not black. And maybe we're trying to fit a square peg into a round hole. So, it's these experts here that, you know, will help navigate clients as stewards um craftsmen at their at their expert expertise um to get us through all those.

So, let's take a moment. I'm going to let you guys introduce yourselves.

Sure. Uh thanks Anthony for that. Good to be here. Uh Raj Mukji um basically lawyer in trad for a long time uh in the tax and compliance side. Work for a number of investment banks as tax council.

Um veered left in 2017 and became the head of tax reporting and regulatory reporting for Coinbase followed by the global head of tax at Binance. uh followed by the global health tax at consensus ethereum blockchain company then uh was the head of the office of digital assets for the treasury department responsible for a number of regulations that we're going to talk about in a minute um and then after my three-year tenure at the Treasury Department finalizing those regulations um I now advise clients both in Europe um and the United States on various tax and compliance issues in the digital asset ecosystem

everyone Kevin Fitzgerald great to be here. I'm a partner at HT Digital. We are a audit and accounting firm that specializes in the digital asset industry. So all of our clients about 700 globally have some sort of exposure to digital assets in one way or another. So we get to see a lot of unique fact patterns and get to really apply a lot of critical thinking like you said Anthony thinking kind of between the lines that exist and trying to help our clients as best we can.

I started my career at PWC on the audit side. worked there for about five years before joining EY where I worked there for four years on the digital assets team specifically at EY. Our job was to basically work with any digital asset audit clients that EY had and help do the digital assets portion of the testing. So really got to hone in on those skills over the last four years before joining HT and now building out a a US practice here for HT digital.

Good afternoon everyone. My name is Mark Lee. I'm the co-founder and audit partner of Phoenix principles LLP. We are a brand new startup firm based in San Francisco Bay Area. Um we may lack we may be new but we don't lack experience.

Myself and my partner have over to total of 30 years of experience. Um you if you do Google search um know I was probably one of the original uh partners who did bunch of audits of crypto companies back in starting up back in 2014. If you go back, Bitcoin price was about $350. Um, so I was I was close to buying a hundred of them, but I didn't buy them. So, if I had bought them, I I wouldn't be here.

But with that, um, Phoenix, a little bit about Phoenix. So, Phoenix, um, is a fullervice accounting firm. We provide audit, tax, and advisory services. Um, work, you know, we do audits of exchanges and, uh, payment companies, mining companies, B2B as well as investment funds are payment. as well if you need that type of compliance work.

Um, yeah, I've been around for a while and uh hopefully I'll meet some of you after after our presentation.

Thanks, guys. So, to start with the regulatory environment constantly evolving and changing from your perspective, what what's front and center and what's the main issue that each of you are bring to the table for your clients? Well, I think from a tax perspective, there a few things that have changed, right? One is now the 6045 regs are operational. So, we have the first year reporting, the easy one um because there were no cost basis requirements, but starting 2027 reporting season.

I think you see you see that um an important part of that is before this there was universal um accounting and lot selection. Now, it's account. So, the that part is important for for tracking and reporting. Um then you have the live international uh layer. I think the previous panel was talking about some of the European regulations.

The crypto asset reporting framework is live for the the wave 1 countries that will exchange information in 2027. Um DAC 8 which is the other arm is operational as well. The US is still somewhere negotiating information exchange so uh with the EU on this. So eventually you'll have factos type information exchange but to be decided. So clients are sort of having to build based on sort of two different sets of principles because blockchain by definition is borderless and there's also are a lot of transactions.

Um and then I won't harp too much on it because clarity is not clear. um but it's not likely to pass and so that that leaves um a lot of questions on on what happens to those that were seeking u guidance but I I will also harp as a former regulator it was refreshing to hear I think it was Ron's panel that talked about there's legislation and then there is the rule making afterwards so I think there's sometimes people get very enthusiastic about legislation passing but you know it takes a long process to get that into actually uh role. So, so I think those are the three things I would mention

and even on the tax legislation front, we saw some activity there. You think of the par act in January, Smith bills that came along. Smith bills, it was a conglomerate of eight different draft tax bills. So, there's certainly some sitting there, right? potential legislation on the burner potentially waiting for par to get passed unlikely but then maybe it sneaks into a bigger bill towards

or as an amendment or an attachment to a bill right so par is interesting because if you look at the D5 sections of it actually pretty much mimics what we worked on that on the D5 roles that got killed by the congressional review act but but I think uh it'll be interesting to see but I think clarity has to pass first or a version of it before that before we see any movement on Yeah. So on the accounting side, shifting there for a little bit, the the main topic that we've been following pretty closely recently is the Fazby announcement around how to classify stable coins on your balance sheet. So up until today, basically stable coins would sit as an intangible asset on your balance sheet, which may seem like a trivial accounting exercise, but but actually has quite a bit of an impact depending on how you're actually using those stable coins. If one thing I like to think about as an example, if you have $50 million worth of stable coins on your balance sheet, those are sitting as an intangible asset and you go to a bank to get a line of credit, that bank may not look at those intangible assets as part of the calculations that they're doing to determine how much money they want to give you and the interest rate at which they are going to give you that money. And that could have a serious impact on your business.

So what Fazby has done is put out some guidance, not formal yet, like we said, still in the proposal period of how to classify or whether a stable coin actually should be classified as a cash equivalent on your balance sheet, which moves it up into that first line item and actually does have quite a bit of impact. And the the three areas as of today that they're looking at are whether you have a direct redemption right with the actual issuer of the stable coin, whether the stable coin issuer is backing that stable coin with highly liquid assets like cash or treasury bills, and then whether you have an ondemand right to actually access the cash backing that stable coin. And and what that means practically is that a stable coin like USDC may be a cash equivalent for one company and it may not be a cash equivalent for another. So it's it's very much on a case- by case basis. The reason for that is if you have a a circle mint account then you have direct redemption right and if you do not then you you do not have that direct redemption right and thus does not qualify as a cash equivalent.

So these rules are still actively being written. The stable coin cash equivalent treatment is a big one and and one quite a bit of our clients are asking us about was on a a call this morning just with a bank. His his clients were asking him about how they should classify these stable coins. So it's going to continue to evolve over time but little things like this make quite a bit of difference in the actual adoption of this technology.

So do you think I can add to what Kevin says? So uh just taking off what he has said and maybe think it more from an audit perspective but incorporate what he just mentioned from an accounting perspective. So the recent proposed uh cash equipment that he had mentioned um has three criterias that holders of stable coin has to demonstrate and I'll just highlight one of them which is uh you have to demonstrate there's a one for one reserves. As you guys know, stable coin should always in general it's the safest if you have a cash that's backing those coins that's out there. So the proposed standards holds the holder responsible for showing or demonstrating there is a onetoone relationship and uh what that means is from an accounting perspective as Kevin mentioned yeah if you meet all those criteria um then it shifts it up to the cash equivalent concept.

However um what I want to What you I want what I want you guys to think about is from an audit perspective. What does that mean? That means that as an holder of stablecoin, you have to make sure you can get comfort that whoever is the issuer can demonstrate or has the ability that it is a onetoone relationship. So that that triggers you as holder to find somehow figure that out. Right?

Now let me tie that into the genius act. Um as you guys know the genius act which is not the same as the clarity act, right? The Genius Act is very smart. No, sorry. Okay.

I wasn't sure if you guys got on that. All right. So, anyway, the Genius Act is now a law. It was It's written. It's it's signed.

So, it's a law. The question here is when is that effective? Now, tying the proposed um standard that Kevin mentioned to the Genius Act. The Genius Act, if you read the laws, there's it's certain issuer are considered permitted issuer if they meet the standard in the Genius or meet the the act. So if you're a holder of a stable coin, going back to the last point I mentioned where you have to demonstrate that it's one for one.

But if you're a holder of a stable coin, but that stable coin issuer does not meet the Genius Act, which means they're not a permitted issuer, then the question is, do you have a problem? Because how are you going to demonstrate that you have a onetoone relationship? Right? So that's issue number two. The third issue when it comes to accounting and audit is that the standard further or proposed standard extends that you need to have potentially an accounting policy because as a as a holder of stable coin um you need to at minimal demonstrate what stable coin meets the cash equivalent rule versus the intangible that Kevin mentioned.

And you do have an option that if you have stable coin that meets the the rule, the proposed rule, you can put it up as cash equivalent. But I don't believe the proposed rule says you have to because as long as you have an accounting policy to demonstrate that um you have the option to do that. So even if you choose not to show as cash equivalent, the suggestion is that you should still have an accounting policy to demonstrate what you know, what you can show what are cash equivalent versus which are not cash equivalent. Thanks Mark. U before we move on, considering it's proposed, is it in a comment phase right now and what's that timeline?

Yeah, it's in the comment phase and I believe um it's either October or November is the expiration date. Do you remember that?

November 19th. Yeah. For comments. Yeah.

So, you're all welcome to add your comments and just like the previous panel mentioned, submit your comments and go from there.

But for the love of God, don't use I because when I was at Treasury,

we got 40,000 comments and we by law are required to read all of them and can I can I just tell you probably about 38,000 of them were AI based. So

thanks gentlemen. I so taking a a a transition when we think about what clients are are thinking about I suspect your conversations that you're having today don't reflect the same conversations that you had say a year ago. So like what's on the top of mind and what are you seeing clients bring to the table? I I can start. I mean um I I would say that uh two issues that come up that I do or encounter as part of my audit or and advisory services.

One is the treasury question. Um meaning you know companies that have never been in crypto um all of a sudden got into a crypto because they want to buy these crypto as part of their what they call treasury function. So you know I get questions as to what what what are these what how what accounting policy should I establish? What what control should I put together? How do I safeguard these assets?

Which are very basic questions, right? But the point being that you see a trend that that companies are that have not been in crypto are now getting into crypto because I guess the the famous say of there's you know there's never you know it's never too late to start, right? And so you got so I get a lot of questions on those how how to help them through the process. The other is is the old custody rule. I know that SE121 um came out I don't know 2024 2025 and then when the Trump administration came in uh SE122 came out and rescended 121 and everyone's like well you know when I talk to clients and they're holding on to crypto or custody of crypto they're like oh none of these apply but if you read the fine lines of 121 122 resend 121 to say it doesn't automatically make you hold uh it doesn't automatically require you to put an asset in a liability automatically.

However, 121 says you should still look to see if there's a potential probable loss because if you're in custody of the assets, um you are exposed to a loss potentially. So therefore, under four, you know, 450 ASC 450, you should be reserving um a loss for that potential loss. Not the assets and the liability that you're holding on to, but that loss. that loss of potentially reimbursing your client because you're in custody of the assets. Um the other thing to think about is um and I I hear this all the time, but I always tell my client and when they hold on or have custody of assets, the first thing they say is, "Mark, don't tell me to put these assets and li on the books because 1212 cuts everything."

Well, the the short answer is that's not necessarily true because if you're not if you're a privately held company, technically 121 122 doesn't apply, right? you could um but you also have to think about that even if even if those rules don't apply you may still have to put the assets and liability in books because you meet certain control issues or control requirements and so I I just wanted to caution that because I advise good a good amount of clients and that's the first they throw at me and I always want to make sure that folks are out there understanding that it's not that clearcut to say you you're you're not going to put these assets and liabilities on the books you And and the other thing to think about is it's it's the crypto or the cash. That's the other two. We are thinking crypto is the only thing, but you could be holding on or custody of customer cash and that needs to be on the books or may not. You got to evaluate that as well.

Yeah, I think the general trend I've seen over the last couple years now is this move from infrastructure to application is the the way I like to phrase it where the questions we were getting two, three years ago is I'm thinking about buying Bitcoin. what do I need? And a lot of that discussion was focused on what service providers you need to onboard. You need to have a c custodian. What controls do you need to have in place?

If you're going to use a thirdparty custodian, do they have a sock report? Those types of questions, pricing oracles, if you're actually going to issue a token. And so that's where we started a few years ago. And and since then, it's really shifted into, okay, I'm actually using these things now. How do I account for them?

Or what documentation should I have in place now that I'm actually using stable coins? Or I've I've issued a tokenized money market fund. How do I make sure that I'm following all the the policies and procedures that I should be? And so I think that's been the the biggest shift is where we actually get to see hands-on. Uh one one recent client that we have actually started accepting tokens as revenue effectively for the services they were providing.

And it became a big exercise in revenue recognition of how do you actually value these tokens that might not have even launched yet, but you have to come up with some sort of fair value for these for the the actual services that are being provided. And that becomes a massive revenue recognition exercise which is is exciting as it may not sound exciting but actually is in terms of coming up with a valuation for these tokens and the actual services trying to match those two together. So that's been the biggest shift we've seen from our perspective.

So my clients you know being a single practitioner is sort of all around the world. So I see many different types of questions depending on both their product sets and what their strategy is. So but but one thing I'll agree with with Kevin is that gone from more definitional questions to more ownership and evidence, right? So, for example, who has the obligation? What is the tax strategy?

Um, and that, you know, blends into not just sort of digital asset tax but corporate taxation and nexus rules and and and things like that. Um, where does the data originate, right? Where are the nodes and what what is the sourcing? Because everybody knows, you know, taxation. Sourcing is a huge characterization and sourcing are the two main uh things in taxation.

Um and I think one of the challenges is that strategic planning needs a stable substantive basis and in many areas as the previous panelists have already talked about um there's a lot of things in motion and that's the nature of regulations technology will always be ahead of regulations um but so but tax planning needs that stable base right so I think what we have seen or I have seen a lot in advising clients is that they're building sort of strategies and plans that can withstand u multiple pl plausible rule sets right and so what I've been trying to help clients do is to look at sort of tax reporting tax strategy regulatory compliance more as a governance layer rather than you know you know an out of out of the box tool that they can just you know employ within their own um technology to just do reporting because uh because of some of the uncertainty that that they need to kind of pay a little bit more attention than just just as a reporting function

and Raj probably in the same light you referenced before in terms of like FAT for instance you probably see the convergence of European market US on the reporting standards like there must be more questions coming in that area as well.

Yeah well I think look I mean there's CRS 2.0 know there's there's carf there's ma that's being um taken a look at again I think there's a lot of um reccalibrations within the European market right um I think and regulators have changed their postures um I know um you know there was a talk about the the Swiss being one of the first if you look at what Switzerland is doing it's actually taking a step back now um and if you look at other parts of the world for example in Singapore uh the MAS is very prescriptive they've actually that they're not issuing any more licenses till the end of 2026. Um the US many folks outside are now seeing it as a limited window of market entry. So you know for example I helped recently an Asian exchange get a default license in California which was adventurous by itself because California it was changing its rules day by day by day uh on that. But but yes I mean there's I think a lot of questions that need to be answered.

I don't think a lot of folks paid attention to uh the due diligence requirements in KARF uh that they need to start exchanging and then between the jurisdictions. It'll be interesting to see once they start exchanging that information starting 2027 because I predict that there's going to be a lot of mismatches between sort of the domestic uh reporting of crypto and cryptoreated um activity so far and then what the European standard is. So, so 2027 is is likely to be quite exciting that way.

So, as we look forward now, we were to be sitting here a year from now, how would you see some of those questions evolving? Maybe some entirely new questions, but what do you see on the horizon?

I'll go first. Um, you know, I think a year from now and looking back, I I see a couple potential movements. I think one is the convergence between TreadFi and um tokenization. So if you're familiar with tokenization, you know, it's the concept of taking physical assets and putting into like digital and be able to do transactions with it and and we see some of that already with like figure technology. They do loans and underwriting loans through the blockchain.

But this is even more. This is extending taking traditional finance which we all know you know your traditional equity bonds and stuff turning that into a tokenization that tokenization then gets used through the blockchain and all the data then runs through the blockchain so I see that as a potential and you see this some you see some of this already um some of the tradefi and some of the tokenizations are like real estate right that's that's somewhat almost mature uh but you see other industry I see um what we call private credits which is uh private bonds, private equity, you know, if you have a privately held stocks under, you know, section 144, which you can't sell, you could potentially tokenize that and that, you know, can be then becomes um Trevy going to tokenization. The other thing I see is is adding component to that is the AI piece. So you know once you have the trap to tokenization then add the AI piece to the blockchain and the outcome of that is that you'll have um you'll have uh trusted data because all that transaction that comes through blockchain and that result assuming nothing's manipulated right you have trusted data the outcome of the AI is that the AI can then read the data and give you um intelligence on top of that data. So if you add AI plus these TI plus tokenization, you'll end up with trusted data and in intelligence on those data transaction.

That's kind of where I see a year from today. So

yeah, to tokenization I think is one of the biggest trends right now. It feels like we're getting the most questions on that. The other area too that I'll hit on briefly is vaults because I feel like that's something that quite a few people have talked about already. The rules themselves are still quite a bit unclear, but the adoption seems to be increasing quite a bit. So from an accounting perspective, if you're going in and out of these vaults, what what does that look like?

What does that treatment look like? There's no clear accounting right now for that. So a lot of it is okay, these are the ex existing rules that we do have today and then this is our best guess of how to apply them. So there is some judgment there. And then just as well because I think it's impossible not to talk about AI.

I was speaking with a a former colleague of mine last week and she was speaking about how she's seen so many companies implement AI in their internal audit function and what it's done is it effectively has shined a light on all of the issues that they had. The AI itself didn't create new issues though it it sure can but it shines a light on control issues that you have in place gaps where people have access to things they shouldn't and your agents are being able to access that information. So I think one trend that we'll we'll see quite a bit is if there's more and more adoption of AI which I suspect there will be then how are you ensuring you have the proper controls and policies in place to mitigate any sort of additional risks that those AI agents are bringing forward. I'll mention something that is a nightmare for any tax ops person, but it's not as sexy, right? We're in September.

Around this time next year, all the tin risk matches for the cost basis reporting is going to the notices are going to start coming. Um, not many people are talking about it because they don't really think about it, but it's going to happen, right? So, so I think that that that's something that that I think about. Uh, I've already mentioned Karf. I think clarity should market structure pass.

I think there's implementation um challenges down the road. um if it doesn't pass um then how far these agency no action letters went and you know these orders there's going to have to be some some sort of um evaluation as to because you know no action letters and these exemption orders can also be rescended right um and on the tokenization front I think I'll make a couple of points um one is from a tax perspective if you look at the tokenized money market um fund shares for example Um there is no coordination guidance between the 1099B and the 1099DA regimes. Um and under many circumstances it could either be a security or not. So so reporting is a nightmare. Um everybody raves about atomic settlements but there are some challenges to autonomous atomic settlements uh especially from a tax and accounting perspective because many of the standards are based on actually having time to to look into and you know netting for example and all of that.

Um, and then you know there are other issues such as I've already mentioned from a from a car perspective being the first year of exchange of information. So um I'll leave it at that.

I presume we could talk about this for another 30 minutes easily but it looks like we're about up for time. So please join me in thanking my panelists.

Thank you.