Crypto bankruptcies have generated a wave of new accounting clients for Armanino

Although bad news for the companies involved, bankruptcies, liquidations and tokens going to zero have created countless opportunities for accounting firms like Armanino.

The company, founded in 1969, began looking into offering services to crypto firms back in 2014 and has since built out a whole range of products under the umbrella of the TrustExporer brand.

“The things that happened over the summer were really like what we’ve been planning and trying to talk to people about,” said Clayton Lowery, a senior blockchain manager. Decrypt at the Chainlink SmartCon event in New York. “It took a couple of years, and unfortunately before that some bad things happened. But that’s really what we’re seeing. We’re seeing so many people come in.”

He added that the enthusiasm for stablecoins, first dulled by algorithmic stablecoin TerraUSD wipes out $40 billion in May, looks set to return.

“Traditional finance is really starting to look [stablecoins] like banks,” Lowery said. “Even community banks around the country are exploring issuing their own stablecoin, all the way up to the largest banks.”

Lowery said he’s also “starting to look a lot more internationally, including in Europe and England.”

Today, the firm counts some big names in crypto among its clients. Armanino used to be Coinbase’s auditor before the crypto exchange switched to Deloitte. The firm also piloted what is now Proof of Reserves software as a dashboard for stablecoin issuer TrueUSD.

CoinShares, which has more than $2 billion under management at the time of writing, has been using Armanino’s real-time attestation software for its exchange-traded products since 2020.

The certificates check a company’s account balance. For stablecoin issuers, this number is compared to how many tokens have been issued. And for lenders, like Nexois it compared to a company’s liabilities.

Lowery said one of the unofficial roles he and the crypto team at Armanino perform has been educating clients about the difference between an audit and an attestation.

“There is a big difference between the concept of audit and certificate. Everyone uses ‘audit,’ and it’s kind of become a standard with smart contract auditing on the code side,” Lowery said. “And then everyone throws around ‘audit.’

In layman’s terms, an audit provides a much more in-depth examination of a company’s finances. Meanwhile, an attestation is a report carried out by an independent firm using a procedure provided by the client.

Many major crypto firms have stopped using the word “audit” for things that are not audits. Nevertheless, stablecoin issuers Circle and Tether, the two largest by very large margins, still differ in the terms they use for their reserve reports.

In his August report, accounting firm Grant Thornton said Circle’s “assertion” about its reserves was “quite pronounced.” Tether’s latest reserve reportthe first from BDO Italia since the company dropped MHA Cayman, says the accounting firm found Tether’s statement of its reserves “quite presented.”