Accounting for Cryptocurrency Businesses: Why Experienced Support is Crucial
Choosing Singapore as the location for your Cryptocurrency business is a smart move. Not only is Singapore a hub for tech innovation, but it also offers tax incentives and asset protection for licensed cryptocurrency businesses. To get started, you’ll complete the application process demonstrating that you meet all requirements and, if approved, will receive a cryptocurrency wallet or exchange license from the Monetary Authority of Singapore (MAS).
If you’re lucky to join the ranks of the 18 licensed cryptocurrency businesses in Singapore, exciting new forms of company ownership await. However, the real complexity begins when it’s time to manage your books in compliance with MAS.
Cryptocurrency is so new that accounting standards for businesses in this sector are still in their infancy, making it challenging to ensure compliance. Standards are also inconsistent from one location to the next, as only a few countries have regulations governing digital assets.
While cryptocurrency transactions are inherently ledger-based (i.e., backed by blockchain), the criticality of compliance and high-risk nature of the sector means that to maximise operational longevity, these businesses require full-scale, high-quality accounting support.
Several cryptocurrency accounting solutions are available. According to a recent article by Fit Small Business, some of the best include SoftLedger, Cryptio, and Cryptoworth. Of course, each application has pros and cons, and the choice ultimately depends on the business's needs.
While these solutions may be helpful, they may not ensure complete compliance for cryptocurrency businesses. Each transaction must be analyzed thoroughly to ensure they abide by strict MAS guidelines. As a result, accounting for cryptocurrency businesses is different and more complicated than for most other business types.
Here, we explore three key reasons why.
Cryptocurrency Value Conversion and Timing
One of the most important requirements in cryptocurrency bookkeeping is converting cryptocurrency value to the company's base currency. As cryptocurrencies are traded globally, they are subject to exchange rate fluctuations, requiring a keen eye on the exchange rate at the time of the transaction. Additionally, the timing of transactions needs to be tracked, accounting for the value when the cryptocurrency was generated or mined.
Involvement of Traders
Cryptocurrency traders must be involved in the bookkeeping process to define each transaction's purpose accurately. Some transactions, such as wallet-to-wallet transfers, don't impact the books. To ensure compliance, each transaction must be analyzed to ensure it abides by strict guidelines from the Monetary Authority of Singapore (MAS). Any discrepancies could result in penalties or even revocation of a company's crypto license.
Employee Costs
As a popular expatriate destination, it’s no surprise that most cryptocurrency businesses in Singapore employ expatriate talent. However, this carries additional immigration and administrative costs, making it critical to carefully monitor and plan for these expenses. In addition, companies must navigate Singapore's strict regulations regarding work visas for foreign nationals, particularly those in the tech sector.
The Support You Need
In the rapidly evolving world of cryptocurrency, having a trustworthy and knowledgeable accounting service provider is essential for staying ahead of the game. However, finding a provider that truly understands the sector and local regulatory complexities can be like searching for a needle in a haystack.
Accela Finance has been supporting tech startups for over a decade in setting up their business in Singapore and running their bookkeeping systems in compliance with Singaporean authorities. We are also one of the few companies in Singapore with experience supporting cryptocurrency startups.
Contact us at [email protected] to learn more about how we can help your cryptocurrency business thrive in Singapore.