Sushen Talwar
June 10, 2024

Web3 Finance is Hard

Web3 Finance is Hard

Without getting too detailed, let's tackle this topic from the view of an operator — an in-house finance person. To start, finance at a company is very complex, but at a web3 company with a native blockchain business product, it's more complicated.

Too many moving parts

Just as you would manage your books for traditional accounting — cash, accounts payable, accounts receivable, investments, treasury, and capital gains/losses — you do all of this but for both crypto and traditional books. Then you need to figure out how to merge the two books and still be compliant: FASB + US GAAP, IFRS + local compliance.

Tools, tools, tools

Crypto accounting is still a new world even for CPAs. No one tool does it all for crypto unlike the NetSuites and SAPs of the world. Finding the right tool is hard and gets harder as your company starts with more complex onchain transactions. You need an ERP, a billing tool, a corporate credit card, a crypto subledger, wallet management, and custody accounts. A lot of tools. A lot of moving parts.

Taxes

Everything with crypto other than purchasing with fiat and sending crypto within your own wallets is taxable. Keeping track can be a nightmare especially without a proper tool implemented.

Errors are permanent losses

Unlike bank transfers, where you can call the bank to put a hold on a wire, with crypto you are out of luck if a wrong address is used or you send a crypto asset on the wrong blockchain. This adds layers of review for all crypto transactions.

Treasury

Crypto markets are 24/7, 365. Prices move every hour of the day. Tracking risk with investments and crypto on hand becomes challenging in a way traditional treasury never was.

Nothing in this post is financial or tax advice. Always do your own research — DYOR.