Accounting for cryptocurrencies is a new and difficult territory for institutions looking to enter the space. There are many complexities associated with the buying, selling, gifting, and transacting of crypto. With a constantly changing landscape the need to understand it grows greater each day.
There are thousands of tokens and coins, and hundreds of exchanges that can be used to transact at any hour of any day, and these exchanges can also be used for staking and custody. Additionally, non-standard asset valuations such as mining, forks, and airdrops only increases the confusion behind proper accounting.
Ledgible's mission is to aggregate and normalize crypto transactions for accountants, tax professionals, and institutions. For larger organizations custodying assets, the transaction path for any given asset is highly non-standard. For example, one might buy Bitcoin under ticker BTC on one exchange or XBT on another exchange at a cost basis of $15,000 each. Over the next month that BTC could be swapped for ETH, that ETH could be locked away in a staking platform, and have earned yield in other custody accounts. Each of these transfers & transactions represent digital asset accounting events that must be recognized, with appropriate gains, losses, and more calculated therein. Ledgible traces all of these transactions and calculates necessary tax and accounting information - automatically.
For companies like Ledgible, accurate blockchain data for metrics such as asset prices, wallet balances, and fees or rewards are required to determine taxable events, but data collection is a complex and time-consuming process. Every cryptocurrency exchange requires a team of developers to complete a unique integration, as well as constant maintenance, monitoring, and updates. Once the data is acquired, it still needs to be cleaned, checked for inaccuracies, and standardized. Multiply that by the popular exchanges used, and the feat becomes even more difficult.
Normalization also poses a challenge. Each exchange or decentralized protocol has its own name and nomenclature for assets. Assets like bitcoin or exchanges like Binance could be labeled completely differently on one platform to another. Additionally, there is no set “end of trading day” in crypto and users can buy and sell 24 hours a day, 7 days a week.
Amberdata helps solve this crypto data challenge for Ledgible in the decentralized finance space. Amberdata is the leading digital asset data provider and delivers comprehensive data and analytics into blockchain networks, exchanges, and decentralized finance. Amberdata calculates DEX and lending protocol returns, fees, and impermanent loss at the event level, delivering difficult to calculate data with unparalleled granularity.
To solve the Crypto Normalization problem for tax firms like Ledgible, Amberdata standardizes trading volumes by using 12 AM UTC as the end of day for all exchanges and normalizes all token and exchange names, making it simple to track transactions across the entire crypto ecosystem. With the help of Amberdata’s extensive DeFi wallet and liquidity pool data, Ledgible offers necessary tax and accounting information automatically, paving the way to make complexities simple. Ledgible’s partnership with Amberdata allows access to normalized, readable data to power any accounting, tax, and institutional use case.
This data has become important to accounting and institutional investors need this data cleanly, accurately, and in a Ledgible manner. Even though many exchanges make it hard to get comprehensive reporting, crypto tax software like Ledgible can be used to collect data from different platforms and account for these transactions in their books, on their returns, or in their systems with ease.
Amberdata is the leading provider of digital asset data. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance, empowering financial institutions with data for research, trading, risk, analytics, reporting, and compliance. Amberdata serves as a critical piece of infrastructure for financial institutions entering the asset class and participating in digital asset markets. To learn more, visit amberdata.io.
Ledgible is an AICPA SOC 1 & 2 assured tax reporting and portfolio tracking platform for crypto assets for professionals, enterprises, and consumers. The Ledgible Crypto Platform is the proven crypto asset solution for tax and accounting professionals with leading accounting firms, institutions, and major crypto companies globally. Ledgible Crypto Tax Pro is used by thousands of firms to make tax reporting easy for their professionals and clients. For more information, visit ledgible.io.