The Future of Crypto Accounting with Chandan Lodha from CoinTracker

[00:00:00] Chandan: There still are pretty significant hurdles for businesses getting really streamlined on crypto rails today. Most of the people I talk to don't have robust accounting fundamentals set up. They handle things manually or in spreadsheets or by hand. This is very common. It's not the exception, it's the norm.

[00:00:18] Chandan: Crypto accounting right now is probably one of the top hurdles that businesses have from adopting crypto. And ideally, I think the world that we wanna get to is a world in which crypto accounting is actually easier than fiat accounting. It's actually more streamlined than crypto accounting. It actually becomes easier to run your business on crypto rails than fiat rails, and that's actually a selling point.

[00:00:41] Umar: Welcome to The Accountant Quits Podcast, where we help accounting and finance professionals learn how to manage a business using crypto. Today's topic is on the future of crypto accounting. 

[00:00:53] Umar: Tokenization may be at an inflection point. Analysts forecast that 4 to 5 trillion of tokenized digital securities could be issued by 2030.

[00:01:04] Umar: The natural question to ask is how financial services companies and accounting professionals respond at this juncture. 

[00:01:11] Umar: A few years ago, crypto accounting was still the wild west. There were clear rules, no standard tools, and definitely no playbook for how to reconcile thousands of on chain transactions across wallets, exchanges, and protocols.

[00:01:26] Umar: But that has started to change. 

[00:01:28] Umar: Accounting bodies have stepped in with fair value guidance, regulators are paying attention, and slowly a real crypto finance stack is emerging for businesses. 

[00:01:38] Umar: Still for accountants stepping into this space, the challenges remain very real. Today I'm joined by someone who's had a front row seat to all of it.

[00:01:48] Umar: Chandan Lodha, Co-Founder of CoinTracker to discuss the future of crypto accounting. Since launching CoinTracker in 2017, he's helped over 2.5 million users simplify their crypto taxes, and now he's taking on enterprise accounting with the launch of a new crypto subledger. 

[00:02:07] Umar: Lastly, I'd really appreciate your support to help us grow by liking this video and subscribing to our channel.

[00:02:14] Umar: Now, enjoy my conversation with Chandan. 

[00:02:17] Umar: Chandan, welcome and thanks for taking the time to be here. 

[00:02:22] Umar: Thank you so much. I'm excited to chat. 

[00:02:25] Umar: To start, can you please share your background, how you became interested, with blockchains and the origin story of founding CoinTracker. 

[00:02:34] Chandan: For sure. So, I basically got my first foray into crypto and specifically Bitcoin in 2014.

[00:02:43] Chandan: It had been on my radar a little bit before then, but I hadn't really taken it seriously. But I was working at Google at the time on, I think the first integration between Coinbase and Google, and it was a small integration and a product called Google Now that would basically show you your wallet balances and new transactions.

[00:03:01] Chandan: And as a result of working on that, I had a Coinbase account and the Coinbase team gave me like a super small amount of Bitcoin. And I actually mostly ignored it for the next three years. But then in 2017 I was in the process of leaving Google to work on something entrepreneurial, and I was pretty interested in FinTech at the time.

[00:03:21] Chandan: I thought it was one of the spaces that had the potential to grow by, you know, a thousand x over the next five years. And I was still a little skeptical of crypto at the time, but I went back to my Coinbase wallet that I had from, you know, three years before that. And then I was like, oh my God, like this totally insignificant amount of Bitcoin is now worth like 10 times more.

[00:03:43] Chandan: Maybe I should confront some of the biases or stereotypes I have about this industry and just like look into it a little bit more. And the next thing you know, I was kind of dabbling with a bunch of different crypto stuff. I had accounts on a ton of different exchanges I built an Ethereum miner in our office.

[00:04:00] Chandan: I was running a, a Monero full node on my computer and I just had transactions everywhere. No way of keeping track of it. My spreadsheet was exploding. You know, the classic story that everyone who's gotten down the crypto rabbit hole knows. And so the first version of CoinTracker in 2017 was actually just, you know, a personal hobby project to solve me and my Co-founder, John's personal pain point of how the heck are we gonna keep track of our own transactions and then the rest of the journey is history. 

[00:04:29] Umar: Can I ask you, how has your time at Google helped you build CoinTracker? Is there something, maybe a bit tangible that comes to mind or maybe given these are two completely different roles, it cannot be compared?

[00:04:42] Chandan: Google is definitely very different, both in terms of the industry and scale of of CoinTracker. But there, there certainly are some lessons that I think have carried over. So, for example, I was at Google for four years. Part of my time there I was working at Google X on this project called Loon, which is about providing internet access to people in rural areas of the world. 

[00:05:04] Chandan: So I was like in the Amazon jungle in Peru. I went there like nine times. And I think some common thread of what interested me about that project, which also interests me about crypto, is helping, connect or empower folks who are often forgotten or disconnected.

[00:05:22] Chandan: And so there's still very early stages of, of crypto on this front, but I think there's something really powerful about how some of the top crypto projects are taking off with the most traction in places where the banking infrastructure is the worst in developing areas. 

[00:05:36] Chandan: So I think there's a common thread there of really interesting parallels of how unconnected people kind of leapfrogged desktop computers to go into the mobile world. And similarly, there's some folks who are in kind of unbanked or underserved communities in various places that are kind of leapfrogging like Swift or ACH or basic bank transfer stuff to have mobile based peer to peer international stablecoin usage. 

[00:06:01] Chandan: So I think that there's just like a common thread of values and like how things are playing out that is quite interesting there. 

[00:06:07] Chandan: A couple other things. Google. Really talented folks there. A lot of our team is ex Google, my Co-founder I met at Google. So a lot of the folks on our team come from these like high technical bar of environment, which has been really good for our product development. And, and similarly I think the culture at Google, like a positive thing has been the, the product development lifecycle there really emphasizes strong product quality and, and strong engineering fundamentals, which are cultural identities that we've carried forward into CoinTracker as well. 

[00:06:37] Chandan: There, there, you know, they're not all good. There. There are things we've had to unlearn as well, but those are some of the positive things. 

[00:06:42] Umar: Now the title of the episode today is on the Future of Crypto Accounting.

[00:06:46] Umar: You've been building a crypto tax product since 2017. Like I mentioned, you've had this front row seat as, crypto tax and accounting guidance was slowly evolving. Now accounting standards and guidance for crypto have improved a lot. Regulatory clarity is improving bit by bit, so. Running a crypto business isn't quite the wild west it once was.

[00:07:09] Umar: From your vantage point, what do you think are the biggest challenges businesses face today in terms of crypto accounting? 

[00:07:17] Chandan: That is true. I think things have come a really long way, even though the duration that we've been building CoinTracker over the last eight years. And so yeah, it's certainly a different world now than it once was, but there still are pretty significant hurdles for businesses getting really streamlined on on crypto rails today, and we see this all the time, I've talked to thousands of, of people who are, who are in this boat. 

[00:07:39] Chandan: Most of the people I talk to don't have robust accounting fundamentals set up. They handle things manually or in spreadsheets or by hand. I just talked to a team today that spends two weeks every month reconciling their crypto activity by hand. This is very common. It's not the exception, it's the norm. 

[00:07:58] Chandan: And so I think there's a, a lot of work for people like us in the industry to build really solid tooling and processes and best practices to make this an easy problem. Like crypto accounting right now is probably one of the top hurdles that businesses have from adopting crypto, and ideally, I think the world that we wanna get to is a world in which crypto accounting is actually easier than fiat accounting. It's actually more streamlined than crypto accounting. It actually becomes easier to run your business on crypto rails than fiat rails.

[00:08:32] Chandan: And that's actually a selling point, and, and that's the world that we're trying to build for. That's the world we're trying to head towards by making tracking all these assets really easy, having accurate, high data integrity, high quality data integrity, readily available, making it super easy for people to generate a statement of digital assets and standard financial statements. Those are the types of things I, I really wanna see into the world and, and kind of the types of things that we're working on. 

[00:08:57] Umar: Yeah, I agree. But we, in the very early days of, businesses using crypto and crypto accounting is hard. We teach it like, at the academy, like, what should businesses do?

[00:09:08] Umar: But when I have to do it myself, it is never a straightforward, process. You always come up with like different scenarios, yeah. 

[00:09:16] Umar: So my next topic is on, why did you decide to build a subledger? So, like I mentioned in the intro, CoinTracker is already trusted by more than 2.5 million individuals, and you've expanded to serve enterprises now, and I noticed the slogan on the enterprise page is accurate crypto accounting finally. 

[00:09:36] Umar: So it is a very competitive market, and the listeners will be familiar to a lot of the subledgers we've interviewed here. So I want to ask you, why did you decide to launch a subledger? 

[00:09:48] Chandan: Thanks for the question. This is something that we didn't take lightly. We spent a lot of time thinking about this, and like you mentioned earlier, I've been working on crypto taxes and portfolio tracking for eight years.

[00:10:00] Chandan: We started doing this in 2017 before most of these subledgers even existed. And part of the reason why we didn't do anything in this space before then is that we're a startup. There are very few things a startup can do well, and certainly not many things, multiple things, right? We're resource constrained.

[00:10:21] Chandan: We wanna pick one problem. Really focus on it and then solve it better than anyone else in the world. And that's the only way we're gonna succeed as a startup, because again, we're resource constrained. There's lots of people out there trying lots of different things. And so that problem for us originally was the retail crypto tax problem for people like you and me to make sure our own personal crypto taxes are really solved. 

[00:10:45] Chandan: So we've been spending eight years doing that. I think we've built the best product in the industry. We're partnered with TurboTax and HR Block and Coinbase and Solana Foundation and Uniswap and Phantom Wallet, you know, OpenSea, see a lot of the major companies in the space. But what we started to notice over the past year are a couple things.

[00:11:03] Chandan: First of all, the most recent bull cycle in the crypto space was driven more by institutional adoption than retail adoption. And that was kind of a new shift compared to previous bull cycles that we saw, for example, in 2017 around a Bitcoin rally or in 2021 around NFTs and DeFi, which was more consumer driven.

[00:11:24] Chandan: This time we had the approvals of the Bitcoin ETF, Ether ETF. We had a new more crypto friendly administration in the White House in the United States. We have the FDIC changing the rules around how banks can now custody crypto with the right regulatory controls in place. So there's this massive change in the way that the regulatory environment is now embracing crypto and driving institutional adoption, and that made me feel way more confident that now is the right time to really this sort of B2B crypto accounting problem. 

[00:11:59] Chandan: Number two is that because we've made so much progress on the retail side with consumer, we've spent seven, eight years building a really robust technical foundation around how do we build crypto integrations and ingest crypto data, including from wallets, exchanges, custodians, DeFi, NFTs, and that's almost exactly the same foundation, which is needed to power a subledger.

[00:12:25] Chandan: To ingest all that data. Now a subledger has lots of different features. It's an enterprise or B2B focused product, and it requires integrating with ERP systems like QuickBooks and Xero. It requires understanding journal entries and you know, there's a bunch of novel functionality that's different which we've been working on.

[00:12:41] Chandan: But that technical foundation of crypto ingestion is actually the bread and the butter, and it's the key to what makes a subledger successful. 

[00:12:50] Chandan: So to kind of wrap up the third key point is that I talked to lots of businesses, including many of our customers who were asking us to build a subledger. And I was asking them, why are you asking us to build this?

[00:13:03] Chandan: There are already other subledgers out there, there's already other tools. Why do you want us to do this? And I consistently heard the same thing over and over again, including at ETH Denver, where we were chatting, which is that nobody loves their sub-ledger. I like talked to a room of full of crypto professionals.

[00:13:19] Chandan: Raise your hand. You know, how many of you just love using your subledger? Literally zero people. And I think that made it, that's kinda like the key final insight that made it click for me is that people hate using these tools. They're super clunky, they're outdated, they're not streamlined. It's harder to do crypto accounting than it's to do fiat accounting.

[00:13:36] Chandan: People aren't taking delight in it, and worst of all, the data integrity is not there. Like people don't trust the numbers. The reconciliation process is painful. It is making an obstacle out of crypto adoption for businesses rather than making it a obvious, no-brainer solved problem where crypto accounting is easier than fiat accounting.

[00:13:57] Chandan: And so that makes me feel excited about pursuing the opportunity because we've built this really robust crypto foundation. It does DeFi better than anyone else in the industry. And the novel part of this is bringing it to the B2B market and making it accessible for crypto financial professionals like controllers and things like that.

[00:14:14] Chandan: So that's a problem that we, we feel like we're really well positioned to solve super well for the industry. 

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[00:16:03] Umar: Right, so you just mentioned that the CoinTracker Enterprise is built on the same technical foundation as your consumer crypto tax product. 

[00:16:11] Umar: Now, given that you've been building since 2017, you're not exactly late to the sub-ledger party. In fact, you might be ahead of many of the newer players, especially when it comes to the completeness and accuracy of on chain data. Could you walk us through the technical foundation required to build a reliable crypto sub-ledger, and how does this early start give you an edge in tackling the complexity of on chain data at an enterprise level?

[00:16:39] Chandan: I love this question. So yeah, I think the, kind of like the crux of what a subledger is is ingesting crypto data and reconciling it into an accurate ledger of every piece of activity that's happened. And then after you have that ledger, you can repackage it in various ways, right? You can put it into a tax form based on the local rules of a given consumer's tax, or you can apply GAAP and IFRS standards to make it applicable for a business that's running, let's say in the US or Switzerland and generate financial statements or, you know, you can even build a cost basis engine that's relevant for 1099-DA compliance and make sure crypto brokers and exchanges are getting the data they need to comply with those rules.

[00:17:28] Chandan: But the crux of all of this, the foundation that you're asking about is ingesting crypto data. Reconciling it into a clean ledger and making that available. So the parts that go into that, number one are the ingestion. How do you actually pull in the data from various sources from on chain? Wide number of chains from custodians, Anchorage, Fireblocks, BitGo, Coinbase Prime.

[00:17:53] Chandan: How do you handle exchanges? The Krakens, the Geminis of the world? The Coinbase consumers. How do you handle DeFi? 

[00:18:02] Chandan: This is something that a lot of subledgers get totally wrong, right? How do you understand what's happening in smart contracts and handle things like liquidity pools and bridging and wrapping and staking, and making sure you're accurately capturing the cost basis across those transactions and not just treating them as sends and receives?

[00:18:21] Chandan: And then how do you handle handle transfer detection when you're moving assets between two owned wallets, making sure you're handling the, the kind of cost basis accurately through those tax lots. So like all of that work, again, we've spent seven, eight years doing, we've had millions of users go through, we have some of the top most prominent people in the crypto space all doing their personal crypto taxes on this.

[00:18:43] Chandan: As a result, just seeing so many data points, we've really honed that engine. So I think where CoinTracker Enterprise really stands apart is on data accuracy and data integrity across this wide breadth of crypto integrations, blockchains, custodians, exchanges, wallets, and DeFi. Plus, the scale at which we operate, right?

[00:19:04] Chandan: This is not like a starter sub-ledger. This is the type of sub-ledger that will grow with businesses as they become more sophisticated and complex and get more in the crypto ecosystem. So we have users that are doing millions of transactions on the sub-ledger, and it scales with them gracefully. It handles the ingestion gracefully, it builds the financial statements quickly, even in those cases.

[00:19:26] Chandan: That's kind of like the power of having worked in this problem for a really long time. 

[00:19:30] Umar: Yeah, I agree. I also always predicted that at some point, like, crypto tax tools will also provide sub-ledger features because, the hardest part, like you said, is on the data ingestion side. Now, if some of the listeners are wondering, could you compare and contrast a tax tracking tool versus a sub-ledger, what would be similar and what's different as well?

[00:19:54] Chandan: That is an interesting question. So maybe like, we can start with what's similar. There's maybe some fundamental building blocks that are kind of similar, similar to what you were just describing, right? You need to ingest crypto data. You need to sort of reconcile it and get it into an accurate state that's understandable. 

[00:20:11] Chandan: And, the sort of the components that go into that are the crypto ingestion, the transfer matching, the cost basis detection, the pricing, so that general sort of accounting fundamental framework is, is similar. 

[00:20:25] Chandan: What's different is, number one, the user base is totally different. With taxes you're often dealing with consumers who are not super financially or accounting sophisticated. Almost none of them are thinking about taxes before they start with crypto, right? Tax is usually the last thing that consumers think about with crypto, not the first thing. So oftentimes they don't really know how the tax stuff works.

[00:20:49] Chandan: They may have missing wallets and exchanges that they've forgotten about. They need a little bit more handholding and guidance around how to do things properly and the resulting experience ends up being a little bit more simple. B2C consumer oriented, trying to choose smart default options for people to set them up for success.

[00:21:09] Chandan: Whereas on the sub-ledger side, the B2B side, the default user tends to be a more sophisticated finance professional, maybe like a financial controller. Sometimes people are new to crypto, but usually they really understand how accounting works and debits and credits and general ledgers. And you know, they, they're often CPAs.

[00:21:27] Chandan: They have a deep understanding of the domain and so they need to have much more fine-grained controls to personalize the experience and the treatment based on the needs of their business. Accounting is also a core part of running a business. It's not an afterthought that people think about once a year, like consumer tax.

[00:21:46] Chandan: It's something that people are living and breathing every day, every week, every month, closing their books. So the experience needs to be tailored towards these more power users with more fine grain controls so that people can track and treat things the way that makes sense for them. And for their business.

[00:22:02] Chandan: And the resulting output is not a once a year tax form, but rather these ongoing financial statements and deep integrations with their ERP systems, their general ledgers, and kind of empowering the businesses to achieve their business goals. At the end of the day, turning these financial controllers from sort of like reconciliation analysts into strategic insight, driving financial professionals for the business that help them to grow more. So that's kinda like the difference. 

[00:22:31] Umar: That's very clear. I wanted you to provide this to the listeners. Now there is an emerging tech stack to manage a businesses in crypto today. 

[00:22:39] Umar: And for the listeners, you can also check them out on the theaccountantquits.com/tools . We've recently added CoinTracker to our list and the CoinTracker team has been very kind to offer you guys with a $500 discount for your first year of subscription. 

[00:22:55] Umar: Now, there are some subledgers on the market today offering invoicing and payment capabilities, and there are some subledgers I noted that also offer main ledger features. I wanna ask you, what's your perspective?

[00:23:07] Umar: Do you think subledgers should aim to be this all in one solution? 

[00:23:12] Chandan: Yeah, it's interesting. Different people are doing different things. Maybe, it's hard for me to comment on what everyone should do, but I can tell you what, what we're planning on doing, which is that I want to make it super easy for people to run businesses on crypto rails.

[00:23:24] Chandan: I want people to be able to access all of these new fundamental technical building blocks. That are available in the crypto ecosystem that are hard to access today. And so we wanna build whatever products or tools that businesses need to confidently do that. I think one that you specifically touched upon that is very clear is this massive trend around stablecoin adoption, right?

[00:23:48] Chandan: We have stable coins growing at a crazy pace, and it is enabling businesses to transact 24/7, not have to worry about holidays. Near real time settlement, including internationally, especially for B2B payments, that can be really huge. Having way more liquidity, being able to self custody these assets or deal with them when and how you want to. 

[00:24:09] Chandan: These are big benefits. Being able to have faster, cheaper payments. There's many businesses that can't even exist without having access to that, so it's really gonna change the way the international payment landscape works. 

[00:24:20] Chandan: Right now, so our Controller at CoinTracker, for example, Tomek, he generated the first SEC approved financial statements for a crypto company ever.

[00:24:28] Chandan: And he's been going through running some of our own crypto invoicing and billing through crypto rails using CoinTracker Enterprise. And even with like the state-of-the-art tools today, it's like a cumbersome process. 

[00:24:39] Chandan: So for example, if you want to pay a USDC invoice or receive a USDC invoice, it's, it's quite, quite a process, right?

[00:24:47] Chandan: You, you get an invoice, you have an address. You copy and paste all the characters one by one into your wallet. You double check that they work. You generate a test transaction. You send one USDC to the counterparty. You call them, you make sure they received it. Once they say yes, you know, your heart attack stops.

[00:25:04] Chandan: Then you put it in again. You generate the rest of the invoice payment. Then you confirm with them again that they received the full amount. Now you have two different transactions. You need to reconcile them from your subledger into your general ledger. You need to tie in your invoice to that transaction.

[00:25:20] Chandan: You might have that invoice in multiple places, including your subledger and your general ledger. Like this is quite a cumbersome process. All of this should be a one click experience where you, you know, you drop your invoice into the relevant place. It syncs to all of your tools. It automatically tees up all the payments.

[00:25:36] Chandan: It has an address book that understands which are safe addresses. It verifies that everything is working. It gives you notifications along the way to make sure you have peace of mind. Like these are the types of experiences that I'd love to see CoinTracker Enterprise build, and it's exactly the type of stuff that we're thinking about. 

[00:25:50] Chandan: What can we do to enable your business to take advantage of these new building blocks on, for example, stablecoins, in a more seamless way?

[00:25:58] Chandan: I think the things where I, maybe a little bit more skeptical of is forcing people to use a specific tooling because of the way that you're building things. Like I think a big lesson for me going from the B2C crypto tax side to the B2B crypto subledger and accounting side of things is that these business professionals, these finance professionals are really sophisticated, they're super smart, they really understand how their business works, and different businesses need things to be treated in different ways.

[00:26:28] Chandan: Some people love having a separate subledger and a separate ERP system because a lot of their activity is in the fiat world, or they're doing a lot of kind of payroll, or they're doing a lot of different currencies, or they have other types of subledgers outside of crypto that are important for their business.

[00:26:44] Chandan: Other people are crypto native and they hate having an ERP system. The last thing they want is QuickBooks. They want everything in one crypto native general ledger. 

[00:26:53] Chandan: So, I think different product experiences make sense for different types of businesses. And the key learning for me there has been to help enable businesses to achieve the goals based on the types of businesses they have.

[00:27:04] Chandan: The types of experiences we're most excited about building are the ones that enable them to do that. Like, for example, really streaming, streamlining, accounts payable, accounts receivable, and stablecoins. 

[00:27:14] Umar: Now, could you provide an overview of the new CoinTracker Enterprise product? Like what, what are the features available today and maybe what differentiates CoinTracker from the existing competitors today?

[00:27:28] Chandan: Sure. So CoinTracker Enterprise is CoinTracker's Crypto subledger. For, for those who aren't familiar, that means basically what we do is enable businesses to streamline their crypto accounting. And some of the key features of that, like we discussed, are ingesting crypto data. We support 500 different integrations across all the top custodians, wallets, exchanges, blockchains, DeFi, NFTs, so high breadth and depth of integration coverage.

[00:27:56] Chandan: That's one major differentiator. 

[00:27:57] Chandan: Especially on the DeFi side, we often see people are spending crazy amounts of time and money trying to reconcile those transactions. A key differentiator for CoinTracker Enterprise is DeFi is very native to our experience. So those transactions get auto classified without any human manual intervention with accurate basis, accurate data integrity right out of the box.

[00:28:18] Chandan: And as an example of that, we've auto parsed 50,000 different smart contracts to personally handle exactly how they work, whether they're liquidity pools, lending deposits, withdrawals, bridging, wrapping, staking, all of that handled totally natively and automatically by the subledger. 

[00:28:35] Chandan: A second thing that we do is we're built for scale.

[00:28:38] Chandan: So we're not just dealing with mom and pop shops here like we do on the consumer side, which we also handle really well. But we also deal with major businesses, major companies, major protocols that are doing millions of transactions. And so we're built for growing with these companies so that you don't end up having to rip and replace a solution after a year or two because your activity is not too complicated.

[00:28:59] Chandan: And now you have to go through the painful process of switching subledgers. We're built to grow and scale with these companies from day one. 

[00:29:06] Chandan: And then third, we've adopted the statement of digital assets format, the SoDA format for reporting financial statements for crypto, which includes an income statement, a balance sheet, a coin roll forward report for every period, and these are generated dynamically on the fly for each period that people are working with. So for those financial professionals who are familiar with all the traditional financial statements, you can start to expect that same level of data, accuracy, fidelity, and reporting in a familiar format.

[00:29:35] Chandan: That is available to all CoinTracker Enterprise customers. We basically wanna bring the best of the learnings of decades of financial reporting from TradFi into crypto. That's all live and available now. 

[00:29:45] Chandan: There's a bunch more features that are available as well, but those are kind of the core things.

[00:29:50] Chandan: High data integrity, including breadth and depth of integrations plus DeFi, scale, speed, really good user experience and high fidelity financial reporting statement of digital assets, and all the best reporting that you can expect from a crypto accounting solution. 

[00:30:06] Umar: Very cool. And for the listeners, Chandan mentioned, SoDA.

[00:30:10] Umar: If you wanna learn more about SoDA, we recorded an episode with Samuel Leichman from Propeller Industries on Episode 65, so you can check that out. 

[00:30:18] Umar: Now as per your website, CoinTracker calculates tax reports for a hundred plus countries worldwide. I wanna ask you, are those reports also available for enterprises now?

[00:30:29] Umar: And can an enterprise user solely rely on the tax report by CoinTracker to submit their tax return? Or would you still recommend having a crypto tax accountant review the data before submission? 

[00:30:43] Chandan: Great. A bunch of great points there. So first of all, Sam is great. He's the one who actually taught me about the SoDA reporting standard.

[00:30:49] Chandan: I think he's been one of the big champions of that. So thank you, Sam, for doing that. Plus one on checking out the SoDA reporting standard. 

[00:30:54] Chandan: In terms of tax and accounting, as folks here will know there, you know, they're slightly different needs, between the two of those and also between consumer and enterprise.

[00:31:00] Chandan: So on the consumer side for crypto taxes, we currently support a couple different countries, US, UK, Canada, Australia, et cetera, and we generate personalized tax reports for each of those jurisdictions. For, you know, the IRS, the HMRC, the ATO, the CRA, et cetera. 

[00:31:20] Chandan: On the B2B side with our crypto sub ledger, we have global support.

[00:31:24] Chandan: So we're GAAP compliant, IFRS compliant. And so because those accounting standards are fairly global and standardized, and crypto reconciliation is sort of country agnostic, the reporting works, on a global scale from the accounting side. And because we're generating these financial statements, income statement, balance sheet, coin for roll forward report, it provides the building blocks for global businesses, including companies that are run in different countries or even multinational corporations that have entities in different places, again, like Switzerland, US, Cayman, et cetera, to get all the information they need to file an accurate tax report.

[00:31:58] Chandan: Now, at the end of the day. It is a good idea to make sure you have a crypto savvy, finance professional reviewing these things. Especially on the business side. Things can get quite complex. There's all kinds of international tax rules, there's deductions to think about. And this is a complicated space, so I do think it makes sense to work with crypto savvy accountants who really know what they're doing, know how these tools work, especially if you're in these more complicated scenarios.

[00:32:27] Umar: I mean, that's good news for accountants to still learn crypto tax. 

[00:32:32] Chandan: There's good job security here. 

[00:32:36] Umar: Now, back when you, at Google, you were focused on scaling products to millions or even billions of users. It's a very different challenge to what you faced last year, going from zero to one with the beta launch of your crypto subledger.

[00:32:50] Umar: It's a different skillset, and I want to ask you, how are you allocating your time between the individual product and the enterprise product these days, and given the traction you've already had on the consumer side, has anything surprised you about building for enterprise users in the last few months?

[00:33:08] Chandan: Great questions. There's, there's definitely some differences. So, like you said, first of all. Building for zero to one is super different than scaling from a hundred million to a billion. And maybe those are some of the types of lessons that we've had to learn from scratch in the startup world versus a big Google world. 

[00:33:26] Chandan: In particular, it's like, how do you get people to even know or trust or care about this new product that they've never heard about before. And how do you build those relationships? And again, the trust for people to wanna try it and have the awareness around these tooling. And that's been a big focus around us as we focused on the enterprise side and bringing it to life.

[00:33:45] Chandan: Personally, I'm spending all of my time really focused on the enterprise product and we have a great set of team members, including my co-founder John, and one of our product leads, Volkan, who are leading the consumer side of the business. And that helps each of us build our domain of expertise and our focus areas to really own and go deep on and build deep relationships and understand the ecosystem better.

[00:34:06] Chandan: And as I've been focused on the enterprise side, I think a big sort of shift is how user acquisition and sales and marketing and go to market works on the B2B side versus on the B2C side. On the B2C consumer side, a lot of the, the awareness and growth that we've had has been around things like, word of mouth, like really impressing people in the crypto community.

[00:34:28] Chandan: They tell their friends. Partnerships like the ones I was mentioning earlier with Coinbase and TurboTax and HR Block and, and some of our other partners that we work with, where people are already transacting and then they need a tax solution through SEO and making sure we have good content and that we show up in the search results when people are looking for those types of tools.

[00:34:48] Chandan: On the B2B side though, it's very different, right? People are typically going through the communities of other peers that they already know and trust, like through The Accountant Quits, for example, and they wanna see, you know, have other people that are like me, have they had a good experience? Has this worked well for them?

[00:35:06] Chandan: And so a big part of what we've been doing now is actually like helping people build the awareness on the B2B side that like, hey, yeah, we actually do have the best data integrity in the industry. Like, let, let us show you, let us build that B2B community building sales awareness marketing engine. 

[00:35:22] Chandan: And that has been a learning process for sure. Like I think we were really behind on building that B2B awareness for a while. While I think our product was really strong, people didn't know about it. And so we've been now making a bigger push into making sure people are aware of like, hey, there's actually better quality solutions out there.

[00:35:38] Chandan: We did a big push at ETH Denver, for example, and it was great to, to kind of connect with you and a bunch of crypto financial professionals there. 

[00:35:45] Chandan: And I think what's really nice is that once people try it, they can clearly see, oh wow, like crypto accounting can actually be a lot easier. But it is our job to make sure that that awareness exists and grows.

[00:35:58] Umar: Before we continue, let's take a quick commercial break from our sponsor. 

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[00:37:39] Umar: Now, moving on to a very different topic on marketing.

[00:37:42] Umar: One of my favorite marketing books is The 22 Immutable Laws of Marketing by Al Ries and Jack Trout. One of the laws in this book, the Law of Dualities, is that in the long run, every market becomes a two horse race. 

[00:37:55] Umar: You can think of let's say Coke versus Pepsi, or Apple versus Microsoft, or even Xero versus QuickBooks.

[00:38:02] Umar: So some of these battles are geography based, like QuickBooks dominating in the US while Xero leads in other markets. 

[00:38:09] Umar: Now in the world of crypto subledgers, I don't think we'll just see one winner. I see a space for a few tools, maybe again split by geography, company size, like some are focusing on SMEs, others on large enterprises. 

[00:38:23] Umar: And also I noticed lately that some of the subledgers, they don't like being referred to a sub-ledger anymore. They feel this term understates their capabilities, because they're starting to offer to offer other features around audit readiness and regulatory compliance.

[00:38:39] Umar: So with all in that in mind, I wanna ask you what you want CoinTracker to be remembered for in the user's minds? 

[00:38:48] Chandan: Those are some interesting observations that you've made both about how there ends up being this duopoly or, you know, like small number of customer, like, you know, solutions that end up dominating each of these spaces.

[00:39:00] Chandan: Yeah, that, I guess it's still early days with subledgers and crypto in general, so it remains to be seen how that will play out, but I, I could definitely see that playing out the way you're describing with two or a few solutions, basically serving the market, maybe cut across different, sectors. 

[00:39:15] Chandan: How CoinTracker ends up being referred. I guess I care a little bit less about that, to be honest, than whether we're really deeply solving people's problems. Like if we're solving a lot of business problems in a really deep way, that is really ultimately what matters to me. If I had to pick away just to describe that, like optically or for like messaging, I think eventually what we wanna do is build a solution that enables businesses to use crypto seamlessly. 

[00:39:44] Chandan: And I think a subledger is a really key part of that is where we're initially focusing, it's our wedge into the space and accounting is kind of the bread and butter of what we do and what we've known really well for the last seven or eight years.

[00:39:55] Chandan: But like, as you've kind of hinted at and mentioned multiple times, there are a lot of other adjacent problems to be solved and to really make it very easy for businesses to use crypto and have peace of mind about using crypto and make crypto easier to use than fiat. There are gonna be other problems to be solved there beyond the subledger.

[00:40:12] Chandan: And ultimately CoinTracker's mission is to enable everyone in the world to use crypto with peace of mind. And I'd love to see CoinTracker Enterprise get closer and closer to that solving all the problems that a business needs to run crypto rails. 

[00:40:27] Umar: And are you able to share some of the upcoming features and milestones for CoinTracker Enterprise?

[00:40:34] Chandan: I mean, we've talked about some of them and we can go into a little bit more detail. Some of them are just incrementally improving the level of functionality of a subledger itself, right? So that's, supporting more types of integrations, more types of ERPs, making the process of using the subledger just smoother and easier, having more detailed reporting.

[00:40:52] Chandan: So there's one category of, of make the sub-ledger better. 

[00:40:57] Chandan: There's a second category of, okay, what's adjacent to the subledger that we can make better accounts receivable, accounts payable is an obvious one. There's this massive trend of stablecoin adoption. We wanna make it really easy for people to buy, sell, send, store the you know, the types of payment methods that they want.

[00:41:13] Chandan: And ideally, like, not even have to think about it. Like people should not be thinking about whether they're using USDC on, you know, Solana or Tron or whatever Base. They should just be being able to make and receive payments really easily with anyone they want whenever they want. That is kinda like the problem to solve, and I think that's very top of mind.

[00:41:31] Chandan: Also for making sure CoinTracker Enterprise solves that.

[00:41:35] Umar: Now a recurring theme on this podcast is how should accountants upskill for blockchain. And the title of the episode today is On the Future of Crypto Accounting. Where would you recommend accountants to upskill themselves? Like if I were an accountant looking to learn web3, what skills do you think would be relevant, relevant for the next two to three years?

[00:41:55] Umar: And also maybe how does that play into the narratives for tokenization of real world assets, stablecoins adoption, or even AI. 

[00:42:04] Chandan: I feel like they should be asking you that Umar, you're the expert here. But maybe like joking aside, our Head of Tax Shehan, the Crypto CPA, he always makes this joke, which I think is true, which is that, the best CPA you can have in crypto is one who trades crypto themselves.

[00:42:21] Chandan: It's like there's no better way to familiarize yourself or empathize with a problem than experiencing the problem oneself. It's the reason why we dog food all of the CoinTracker's, products ourself, like I file my personal crypto taxes using CoinTracker. 

[00:42:34] Chandan: CoinTracker runs its crypto accounting through CoinTracker Enterprise. That like forces us to face the problem that everyone else that we're selling to is having. It forces us to improve the product cause we ourselves feel the pain. And I would say the same thing could be said for any accountant. Like if you wanna get involved in web3 and really immerse yourself in this space like just go trade some crypto for yourself. Go get some coins yourself. Go do some stable coin payments yourself. Try to get some payroll in stablecoins. Go get some Bitcoin, like play around with DeFi a little bit, mess around with some wallets. 

[00:43:06] Chandan: And you will immediately be confronted with the same problems that you're trying to help solve for all of your clients, and will put in a sharp perspective what's working, what's not, which products are good and which ones aren't? How does this work? What like, you know, what's gonna be confusing for my clients? So I would really encourage people to just dabble themselves in the space and then naturally an extension of that will automatically become learning the tools that help solve those problems, whether they be subledgers, like CoinTracker Enterprise or or otherwise.

[00:43:33] Chandan: And if you have that expertise of firsthand experience actually dabbling in the space and you've mastered how some of these tools work and have a good sense of which ones are are better than others, or which ones work better in certain use cases than others, you're already gonna be in the top, you know, way ahead of the game of the average person or the average CPA, because you'll have that firsthand experience.

[00:43:55] Chandan: Nothing trumps that. 

[00:43:56] Umar: Now for some of our listeners who are maybe skeptical about using crypto in their business or at their companies, what do you think it would take to change their mind? Like what, what, what could be something practical step they do to start using crypto in their business? 

[00:44:16] Chandan: I think it's very normal and healthy to be skeptical of crypto.

[00:44:19] Chandan: And, you know, everyone should question every, you know, you should question everything. Why am I doing, what's the point of this? Like there needs to be a clear value prop. And so I think the best way to overcome that is like, show people the clear value props there are. 

[00:44:30] Chandan: I think one really compelling example of that, especially in the developed world for businesses, is B2B international payments.

[00:44:38] Chandan: I think like try paying someone internationally, B2B just try going through that payment flow and experience what the difference is doing that on TradFi rails versus crypto rails. And I think that's a very eyeopening experience. It certainly was for me. I was kinda like, I don't know, do we need to do crypto payments to people?

[00:44:55] Chandan: And we used to have these like international contractors that we would have doing like small jobs for various things, security reviews, et cetera. Like we'd pay out bug bounties, things like that. The level of time and complexity and hassle, it was to do like an international wire transfer for $500 versus send someone $500 of USDC or BTC or ETH is is just astronomically different.

[00:45:19] Chandan: So I think that's one very specific use case where the pain points and the value prop of crypto comes to life. And at the same time, I totally respect and understand why people are skeptical of this stuff. You really should demand to see what is the value in this for me and my business before dabbling in it.

[00:45:34] Umar: Thanks for sharing. Chandan, I'm looking at the time, and I'd like to wrap up the episode. So the topic of the episode today was on the future of crypto accounting. 

[00:45:43] Umar: As closing thoughts, has there been anything that we didn't touch on that you'd like to share with the listeners? Or maybe how would you, summarize the key takeaways for the listeners today?

[00:45:56] Chandan: For summary for the listeners is ultimately we want crypto to be accessible to everyone in the world, to have them have peace of mind, especially businesses. And that's why CoinTracker is building CoinTracker Enterprise. We think it's gonna be the best sub-ledger experience that people have ever had.

[00:46:13] Chandan: We definitely encourage people to try it and take advantage of the $500 off opportunity that people have mentioned. We're also really interested in educating folks and so if you have questions around how crypto works, how accounting works, how subledgers work, how taxes work. We're really open to that.

[00:46:28] Chandan: You can find me on X at ChandanGLodha, we can put that maybe in the show notes. We have very active support team, and ultimately we want people to just, be able to access the benefits of crypto more. 

[00:46:41] Chandan: And CoinTracker is our contribution to the ecosystem and making crypto accounting hopefully easier than fiat accounting.

[00:46:48] Chandan: But we look forward to learning from, contributing to, and building this community with the broader crypto finance set of individuals. 

[00:46:57] Umar: Cool. And if you guys want to book a demo, I mean, you can also go on the enterprise page of cointracker.io/enterprise, or we, because we've recently added it to our tools page, you'll also see there and like I mentioned, you just have to mention you came from The Accountant Quits to get your $500 discount for one year. 

[00:47:20] Umar: Now there's a last question, Chandan that I usually ask, I like to ask to my guests before they leave is, do you have a favorite quote or a maxim that you live by? 

[00:47:30] Chandan: Oh, just one. I do love, like wise quotes, but hard to pick just one.

[00:47:35] Chandan: Okay. maybe one that comes to mind is, I think it's from Abraham Lincoln, and the line is, the best way to predict the future is to create it. And I think that is particularly relevant in the context of the discussion that we had today. Both with the rise of stablecoins and the rapidly evolving crypto space, the emerging nature of agentic AI workflows.

[00:47:58] Chandan: All of this stuff is going to come together and really change the way finance works and the way honestly, every, all of us and all businesses deal with money. And again, the best way to predict the future is to create it. And that's what we're trying to do. 

[00:48:13] Umar: Cool. Thanks for sharing Chandan. It's been great to collaborate with the CoinTracker team, lately, and I hope we can keep collaborating together on furthering crypto accounting education.

[00:48:23] Umar: Maybe we'll meet at other conferences during the year. Anyhow, I look forward to staying in touch. 

[00:48:30] Chandan: Awesome. I absolutely look forward to it. And thank you so much Umar.