Preparing Accountants for the Blockchain in 2018
This year is the year when the blockchain first started to become mainstream and it is promising to accelerate this process in 2018. Accountants need to start asking themselves if they and their practice are prepared to handle the opportunities that these changes will create as well as the problems they are likely to create for those that are unprepared. We are all aware of the controversy created by BitCoin, which is the first iteration of the blockchain, but what is not controversial and is being endorsed widely is the underlying blockchain technology. Even BitCoin has been getting a bit of grudging acceptance with PwC announcing they will now accept Bitcoin as a method of paying for their services.
This year we witnessed a race by some of the largest banks to embrace blockchain technology as they are well aware that it can be very useful to use distributed ledgers to track and account for financial transactions. A consortium of European banks is planning to use blockchain technology to meet reporting requirements under MiFid II that come into place next year. While over in the US BitCoin has begun trading on futures exchanges and we are likely to see an ETF next year that will allow investors participate without actually buying BitCoin themselves.
We have also seen developments in integrating cryptocurrency into traditional accounting software to make it easier to account for clients who will see more and more transactions carried out in cryptocurrencies. Verady and Acuity have formed a partnership they call the VeraNet platform. It will allow any size company to account for its Bitcoin, Ether, and digital token holdings with confidence, precision, and transparency via a turnkey integration with their existing technology stack.
The question you need to ask yourself is if your practice is prepared to handle clients that are increasingly using cryptocurrency but also if you are ready to start dealing with client that want to automate their reporting systems by implementing blockchain technology into their accounting practices. The first issue is already being solved by integrations with existing software and no doubt you will see new cryptocurrency features being added by the software vendors. It is the second issue, helping clients use the blockchain to implement automated reporting that is the real value added service. For those accounts skilled enough in both blockchain technology and traditional accounting there is an enormous opportunity to generate revenue from clients who want to implement this emerging technology.
There are innumerable ways in which the rise of the blockchain is likely to affect the accounting profession, many of them are not even visible at the point in the blockchain evolution. With each passing day we see people using the blockchain in unexpected ways and today there are hardly financial products in not affected, from something as simple as a personal loan to complex derivative contract with built in execution based on third party oracles, the blockchain is remaking the entire financial services sector. No doubt the growth of encrypted distributed ledgers hold out tremendous opportunity for those Accountants willing to embrace it.
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Director of Accounting for Private Educational Institutions at Jefferson+Partners (Sydney) from 2007-2015. Founded and led Lebrau & Partners Pty. Ltd. from 2015 until now - a boutique accounting firm serving educational institutions across the Asia Pacific (both public and private, primary, secondary and tertiary institutions).