Prompted by the surge in demand for auditing services of crypto firms, traditional accountancy companies are being forced to hire blockchain specialists.
The likes of EY, PwC, and KPMG now have several clients from either the blockchain or digital currency space that want their business practices approved by established names.
Demand Grows for Digital Currency Business Audits
The massive cryptocurrency boom of 2017 helped to create a huge number of blockchain and digital currency-related companies.
Many of these companies have since emerged as scams, prompting legitimate firms to seek auditing services to help them assure the public and investors that their business practices are sound. Responding to the increased demand, traditional accountancy firms are increasingly hiring those with a deep knowledge of blockchain technology to help them check over the credentials of those offering various services to the space.
According to a report in the Financial Times, accountancy firms such as EY, PwC, and KPMG have all started providing the sector with financial auditing services. To help facilitate this, these massive names have been busy hiring staff and developing their own technologies aimed at supporting the auditing of the industry.
The report states that EY had already gained over 150 global clients who were involved in the digital asset sector in some way. These include mining farms, exchanges, and more traditional companies using blockchain tech.
A spokesperson for EY, Jeanne Boillet, spoke about the decision to offer crypto auditing services:
“It’s a no brainer… We have no choice than to address this because some of our clients have invested in that space.”
Meanwhile, Ralph Weinberger of PwC also commented on the shift in the accountancy industry towards digital assets, along with the firm’s hiring of blockchain specialists:
“We are in the midst of a rather significant effort… We are devoting significant resources to how we might provide audit services in not just cryptocurrency, but blockchain.”
Earlier this year, both firms rolled out their own tools to help them audit digital asset and blockchain firms. EY also stated that it would be launching another seven platforms developed “for the cryptocurrency ecosystem”.
However, since it is such a new industry, there are no best practices in place for firms to follow when providing audits. This prompted the Financial Reporting Council in the UK to state:
“In the absence of specific guidance, there is a risk that diverse accounting practices will develop and become entrenched.”
David Lyford Smith of the Institute of Chartered Accountants in England and Wales provided comment on how different firms were approaching the issue of auditing cryptocurrency-related businesses:
“It’s really about proper careful application of current rules and reading the lines between what fits and what makes sense… But that does lead to some disagreements about what’s the best treatment.”