The Top 3 Crypto Accounting Software Providers
Our CPA team ranks the top 3 crypto accounting software vendors for startups.
Cryptocurrencies and crypto assets continue to grow at an astounding rate. Time estimated in November 2021 that the cryptocurrency market exceeded $3 trillion. That growth means crypto is being adopted more and more at many startups and early-stage companies, both for use in transactions and as an investment, and companies need software to track and book crypto transactions for accounting purposes.
How is crypto handled by startup accountants?
Digital assets create some unique accounting requirements. Under generally accepted accounting principles (GAAP), crypto assets are currently considered an intangible asset on balance sheets. Purchases of crypto are recorded at their initial price as the cost basis, and any reduction of value (impairment) must be recorded. However, any appreciation is not recorded. So over time, though the value of the crypto can fluctuate, only declines are recorded. That could potentially understate a company’s true value, and can be confusing to management and prospective investors.
When crypto is sold or used to pay a vendor or contractor, the transaction is recorded as a sale and the company recognizes a capital gain or loss. Companies using crypto need to identify how long the assets have been held to distinguish between short- and long-term capital gains or losses.
Beyond capital gains and losses, other crypto events can produce income, which may need to be included in your revenue and taxed as income. If you are paid in a cryptocurrency, the fair market value of the crypto payment is considered ordinary income. Crypto mining allows companies to collect rewards by helping to create new units of digital currency. If your startup does crypto staking, which is allowing some of your crypto assets to be held to help verify transactions, you may earn returns. The concept is similar to keeping funds on deposit in a bank and earning interest (of course, with crypto there is no FDIC insurance!). All these events can be taxed as income.
Complexities unique to crypto accounting
Or, why crypto accounting needs software help!
Crypto assets are stored in wallets, and although multi-currency wallets exist, different types of crypto currencies may need to be kept in separate wallets. In addition, if you’re using crypto for business transactions, you will probably need to set up wallets for making payments and another for accepting payments. If you’re holding crypto as an investment, you’ll need a separate wallet for that.
Wallets can be held by exchanges, by custodial accounts, or directly on blockchains:
- Crypto exchanges are marketplaces where individuals or companies can buy and sell digital currencies like Bitcoin, Ethereum, and Dogecoin. Exchanges include Coinbase, Binance, Gemini, Kraken, and more.
- Crypto custodial accounts are administered for individuals or companies by a third party, typically one of the crypto exchanges, but there are also companies that specialize in crypto custodial accounts, like Fireblocks, BitGo, and others. These function more like bank accounts and allow easier access to funds.
- Blockchain wallets are cryptocurrency wallets that are set up by an individual user to store and manage crypto assets and aren’t part of an exchange.
Because of the accounting complexities of crypto-related transactions, crypto accounting software needs to:
- Integrate with the major cryptocurrency exchanges and custodians.
- Interface with multiple wallets, regardless of where the wallets are, to track digital assets.
- Record the cost basis details, track market rates, capture transaction fees, and perform gain/loss calculations for each transaction.
- Track the aforementioned crypto transactions back to the accounting software, and includ the counterpraty, assign the transaction to the correct chart of accounts.
- Export the digital asset data into standard accounting software like Quickbooks.
- Provide integrated reporting for management, so that founders, boards, and investors have a clear picture of the true current value of any crypto assets and the company as a whole.
The Best Crypto Accounting Software
Comparing the best cryptocurrency and web3 accounting software, there are currently three primary players we see offering most of the functionality experienced accountants need to close the books and prepare tax returns. These crypto accounting software providers are Cryptio, Tactic and (update Jan 2023: Coinbooks is going to not service startups anymore!). These, and a handful of other players in the market, are rapidly innovating and improving their products. We may have discounts available for startups looking to sign up with these providers - contact us and find out!
Cryptio vs Tactic vs Coinbooks
| Cryptio | Tactic | Coinbooks | |
|---|---|---|---|
| Works with Startups | Yes | Yes | No |
| Syncs with QuickBooks Online | Yes | Yes | Yes |
| Gain/Loss Reporting | Yes | Yes | Yes |
| Supported Exchanges | Binance, Bitfinex, Bittrex, Coinbase, Coinbase Commerce, Coinbase Prime, Coinbase Pro, FTX, FTX OTC, FTX US, Gemini, HitBTC, Kraken | Coinbase, Anchorage, Gemini | FTX, Coinbase, Kraken, Binance, Independent Reserve, and Anchorage |
| Supported Chains | Avalanche, Binance, Bitcoin, Cardano, Ethereum, Filecoin, Litecoin, Near, Polygon, Texos | ETH, Polgyon | Solana, Eth, Polygon, Bitcoin, Avalanche, Polkadot, Kusama, Kadena, Wax, Celo, Arbitrum, Dogecoin, several others |
| NFT Support | No | Yes | Yes |
Review your options with a startup accounting professional
At Kruze Consulting, we currently have clients successfully using two crypto accounting software vendors: Cryptio, and Tactic (note that some of our execs invested a modest amount into Tactic - we really, really want to see this problem solved!). We’re also evaluating other new systems like Multis, which started as a multisignature wallet system but somehow now has a credit card, Gilded, which has both some crypto accounting plus some payments functionality. We did like Coinbooks, which supports a number of exchanges and chains - but they have told us that they are leaving the startup market, so will not be a good solution for startups. Many providers offer free trials, which may be a good way to assess the software and see if it meets your needs.
About Us
A CPA Firm Specialized in Startup Accounting & Finance
Startups are our niche, and our passion. Our clients have raised over $15 billion in VC funding. We are one of only a few outsourced accounting firms that specialize in funded early-stage companies - we only offer financial and tax services to fast growing startups in the Pre-Seed, Seed, Series A, Series B and Series C stages.
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We know how to de-risk your startup’s next venture capital round. Our team makes sure you are ready to fly through your next VC’s accounting, HR and tax due diligence. And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.
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Our practice is built on best of breed cloud accounting software like QuickBooks, Netsuite, Gusto, Rippling, Taxbit, Avalara, Brex, Ramp and Deel. Technology makes us more efficient, saving our clients money and letting us offer higher value services like FP&A modeling, 409A valuation, and treasury advice. Startups deserve to work with CPAs using modern software.
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Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your books and taxes are in order when it’s time to raise another round of venture financing.
What types of startups does Kruze Consulting usually work with?
Kruze Consulting works with funded Delaware C-Corps. Our clients have secured Pre-Seed to Series C or Series D funding. We look to partner with our clients, going beyond the typical outsourced accounting relationship and seeking to provide a higher level advisory role. We feel honored to be a part of making the world a better place, even if it’s one debit and credit at a time.
Accounting, Finance, Taxes, & Payroll all in one solution
Startup CFO services, startup accounting and bookkeeping services, startup annual taxes, expense reports, payroll, state sales taxes: we've got you covered. Our software provides custom tailored dashboards that can be provided weekly or monthly, depending on your preference and plan. Founders are often so busy building their company that they don’t have time to take care of their finances. Traditionally, these companies have had to work with a basket of people to get their work done, including bookkeepers, accountants, AP clerks, CFOs, consultants, and tax accountants. At Kruze Consulting, our founders have one point person, saving time and money.
Client testimonials
We're huge fans of Vanessa and the folks at Kruze Consulting. They set up our books, finances, and other operations, and are constantly organized and on top of things. As a startup, you have to focus on your product and customers, and Kruze takes care of everything else (which is a massive sigh of relief). I highly highly highly recommend working with Vanessa and her team.
Vivek Sodera
Co-Founder @ Superhuman
Prior to Kruze, as a remote-first team, we were weighed down by a lot of the bureaucracy involved with having a distributed workforce. Kruze has supported us above and beyond basic accounting needs by ensuring we have everything we need to expand and support our team wherever they may be located
Zack Fisch
Pequity's Head of Operations & Legal
Avochato has been growing rapidly in the past year – in fact, too quickly for us to keep up with books, taxes, and budgeting for growth. Partnering with Kruze Consulting has been fantastic to manage, track, and analyze our finances while we continue focusing on building our customer base. Kruze’s team knows what startups need.
Alex De Simone
CEO @ Avochato
Everybody, go to Kruze Consulting. They do a great job. I personally can tell you, they've done a great job for our companies, including Calm.com. I'm sure they’ll do a great job for you.
Jason Calacanis
Angel investor
