Solve the complexity of cryptocurrency and accounting with the experts at Ledgible – Sponsored Bitcoin News

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As crypto matures and continues along the path of inevitable adoption, so does the importance of accounting for crypto as an asset class and a source of revenue.

At its core, cryptocurrencies were not designed to fit into traditional financial systems, after all, this is where some of their primary advantages over fiat and banking systems lie. For crypto-natives, trying to fit the square tap of crypto into the round hole in traditional finance is done reluctantly, often the tax time comes – or in the case of businesses with crypto, monthly to close books. In the United States and other regulated economies, these actions are necessary evils to maintain crypto – but paying attention to crypto need not be difficult or detrimental to the overall crypto ecosystem.

But let’s go back for a moment.

A paradoxical equation

As companies and funds continue to push for a Bitcoin spot ETF and other financial products involving cryptocurrency in the more traditional financial ecosystem, we are left with a somewhat paradoxical equation.

Mass crypto-adoption – especially within hedge funds, institutions and other large organizations – is a net positive for the space. It will drive innovation and ensure continuous permanent use of digital currencies. But the paradox here is that this adoption, the ultimate goal for most people in the crypto space, will come in handy to create a symbiotic relationship between crypto and financial regulation and process.

We have seen many crashes of companies such as Celsius, Three Arrows Capital and others when we fall into what is probably another crypto winter. All of this is reminiscent of crashes and outcomes seen in traditional financial markets under greed and mismanagement, among a host of other harmful behaviors. Historically, these results have led to greater scrutiny of space – more regulation – but have all worked to build a more stable financial ecosystem for both consumers and investors.

So we are left with a paradox, the merging of decentralized digital currency and centralized regulation. How, then, can this paradoxical situation be resolved with a result that is both beneficial and fundamental to the growth of crypto, as well as one that maintains the benefits of cryptocurrencies at its core?

While new regulation is a piece of the puzzle here, it has not yet arrived. There has been plenty of rumbling and discussion, but nothing significant has come during US-based or even global new regulation in the crypto space – So far. The second piece of this puzzle is simple – bridge the gap between crypto and traditional finance in a way that maintains the structure of both rooms. Create a symbiotic relationship between the two industries so that both can lift the other up.

This is the solution Ledgible solves for.

Building a solid bridge between crypto and traditional finance is based on being able to match crypto into a world of traditional tax and accounting. The unglamorous basis of traditional finance, securebut if crypto can easily fit into the tax and accounting area, then we solve the paradoxical equation above.

Instead of trying to reinvent the wheel when it comes to crypto, aggregate, normalize and create crypto data Ledgible for traditional economics and accounting enables CFOs, accountants and tax professionals to account for crypto in their workflows. Just as they would with traditional assets, such as stocks or bonds.

This also means that what makes crypto, crypto – the decentralized nature, 24/7 trading, staking, Defi, protocols and more – may continue to create crypto, we will, crypto. Instead of reintegrating crypto into traditional assets, along with stocks and bonds, the financial ecosystem is able to hold traditional financial products in one vertical, and cryptocurrencies in its own vertical, easily bridged by solutions such as Ledgible.

All this means that ensuring the inevitable use of cryptocurrency as it continues its path to the mainstream does not have to remove the asset class for what makes it unique. Rather, with the right tax and accounting tools that calmly bridge the gap between crypto and financial regulation and accounting, crypto can continue to do what it does best.

So at a high level it can be understood how bridging the gap between crypto and traditional finance is not only the optimal path, but one led by the experts at Ledgible. So what specific challenges does the team solve?

Solve the tax and accounting problem

In IRS Notice 2014-21, 2014-16 IRB 938, the agency outlines basic guidance for digital currencies. For federal income tax purposes, digital currency is treated as real estate. From there, the current tax law applies – but what does this really mean?

As mentioned earlier, building a bridge between crypto and traditional finance means linking bulky regulations, such as the IRS, to crypto. Cryptotransactions are increasingly being investigated by the IRS. With still not definitive, tailored guidance on crypto coming from the IRS or other governing bodies, there is still a lot of room left for interpretation with digital assets. Listed in another article on guidance for crypto tax,

“U.S. tax law requires U.S. citizens to pay income tax from any source, and much of the tax code addresses the tax liability of different types of income – or how the income is earned. For example, wages accrue social security contributions, but interest payments do not. capital gains are usually lower than ordinary income. In some cases, the tax treatment of income depends on the legal structure of the business and how many hours a taxpayer actively participates in an activity. “

If your eyes were just glazed, hang well. Financial regulation and tax code is not fun – especially in the crypto area, and that’s why Ledgible uses that tax code and uses it quietly and automatically on cryptocurrencies and trades … do it Ledgible to… Well, hopefully you understand the point.

The Ledgible platform solves the challenge of cryptocurrency and accounting by taking all the work out of it. Think of the platform as the middleman, who takes non-standard crypto data at one end and spits out standardized trading and accounting information at the other.

But with the problems identified and properly resolved – how does all this make cryptocurrency and accounting easy and even beneficial for the user?

The benefits of proper accounting for crypto

At the beginning of this article, it was stated that proper accounting for crypto “does not have to be difficult or detrimental to the overall crypto ecosystem.” Let us discuss the potential benefits of staying true to that statement.

Crypto winters are perhaps the best time to discuss proper crypto accounting, because in times of recession and times of heavy sales, there is no better time to utilize crypto to reduce the overall tax burden. Not only is cryptocurrency loss fully deductible, but for now, you can use tax loss recovery strategies to maximize your benefits.

Proper accounting for crypto in upturns is also necessary, as ensuring that you do not make trades that give you a potentially massive tax bill, or that are at risk of revision, requires some planning – and use a tool for tracking crypto tax.

Simply put, the benefits of proper crypto accounting mean that crypto traders can play by the rules, reduce audit risk, and even leverage existing rules to their advantage. Not only this, but as the gap between crypto and traditional finance is bridged, the barrier to entry into the crypto ecosystem is reduced, which increases interest and otherwise gives greater success into space.

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