Full Transcript for SPECIAL EDITION: NJCPA's IssueWatch and Cryptonomix Crossover

for the industry of where we're gonna go for the next couple years. Um, because Bitcoin was hitting all time highs in November post-election. Um, it's cooled off a little bit since I think we've gotten a little flat from the , those wild rides in late Q4, maybe early January. Um, but, but I think there's a lot of good things in the pipeline. And when I say that, a lot of that is on the regulatory front. Um , so what we've seen just so far here, end of March, three months into 2025, there's been a lot of stuff in motion, right? Um, a couple things that come to mind are , uh, president Trump created the crypto task force , right? So bringing together , uh, like-minded folks within government to try and steer and provide some direction and regulatory clarity that we've been hoping for for years now. Um, so folks from key agencies like the, the SEC, the CFTC , uh, department of Treasury, they're all trying to come together to bring digital asset related regulations to the forefront. Um, and those meetings , uh, will be public. So anyone can jump in at any point in time and listen in to what they're working on actively. Uh , I believe they just had the first one a couple weeks ago mm-hmm . Yep . Um, additionally, president Trump signed an executive order that effectively said, we will block the creation of a central bank digital currency, which was , um, I don't wanna say round breaking, but it was, I think it eased a lot of people's minds as , as to where the US is going to approach these , the , the digital asset space. 'cause we saw o other nations creating central bank digital currency. So it was kind of curious to see where we were gonna fit into this whole ecosystem. Um, which, which parlays directly into the, the Genius Act, which was announced a couple months ago , um, to help provide a framework for stable coins, right? So while the US isn't gonna create their own central bank digital currency, effectively a stable coin issued by the US government , um, we're promoting the current ecosystem of stable coins, which in my opinion is going to be , uh, uh, the number one mainstream adopter for digital assets in this space. Right? I think that's easy for people to denominate in their minds. It's easy to transact and it'll get people familiar with digital transactions and understanding like wallet mechanics. Um, but stepping aside from the regulatory front there and , and , and saying on the same vein as the Genius Act, what came out a couple, I think earlier this month, a couple weeks ago, was the regulatory clarity , um, from the A-I-C-P-A on stable coin guidance, right? So, big deal if you were , yeah, two years ago, right , with the whole FTX situation , um, a lot of exchanges and token issuers were scrambling for these proof of reserves, reportings, and there was a lot of accounting firms that were doing it different, right? There was no structured framework, there was no guidance as to how these reports should look and feel. Um, and the only

regulatory body that had issued any type of clarity on this front was the New York Department of Financial Services about two years ago saying, we need these explicit disclosures in our report. The only caveat with that is not every stablecoin issuer is under the jurisdiction of the New York Department of Financial Services. So 00:09:25.644 --> 00:09:26.524 Minor detail, yeah. 00:09:26.605 --> 00:09:57.125 The E-I-C-P-A coming out with this framework for token issuers to follow , um, and make sure that the reporting requirements are gonna all look and feel the same, is gonna be critical for firms like us, like withum , to make sure we're abiding by the guidelines set forth by our regulatory bodies . So , um, just a few of the things that have been announced so far to date, I know that was a longwinded answer, but , um, a lot of exciting things and I think we're moving in the direction of clarity, which is something we've hoped for for a while now. 00:09:57.715 --> 00:10:27.605 Yeah. And you know, obviously the, the whole do asset conversation or on chain asset conversation is fast to moving . There are all kind of moving pieces also in there, but yeah, I mean , um, the overall pivot and tone has moved one towards trying to give institutions, investors and, and CPAs, you know, trying to offer services more transparency and some more clarity, which I think is always good. Mm-hmm 00:10:27.683 --> 00:10:27.683 . 00:10:28.504 --> 00:10:51.284 And so I have to ask you, mark , right, this whole idea of an SBR right? A, a strategic Bitcoin , uh, reserve. What do you think about that in the, in the context of these pro token policy changes? How does the idea of an SBR actually sort of factor into that? 00:10:52.615 --> 00:11:39.424 Yeah, I think you'll s you , you , you see what El Salvador has done mm-hmm . For digital assets and how they've adopted as a currency and they're thriving right now under their current administration. Um, so I, I think a lot of folks were trying to mirror what they have done and , and that that's not necessarily how the US is gonna approach it, but I think shifting some of our reserve assets to something like Bitcoin or if it has to be a pool . 'cause I know right, to , to , to clarify for our listeners, they're gonna have a strategic bitcoin reserve, which is just made up of Bitcoin, but then if, if anyone was privy to the announcement that came out, there was a , a variety of other digital assets, right? Yep . So what are they gonna do with that? Um mm-hmm . I think the , the term they used was stockpile, where they're 00:11:39.544 --> 00:11:41.065 Gonna , that's correct. Digital assets , stockpile, 00:11:41.095 --> 00:12:45.183 Digital assets , stockpile of some of these other , um, called blue chip crypto assets, right? So , um, they're going to be mingling into both, but I think as a hedge against inflation, as a hedge against other currencies , um, it's, it's a , it's a great investment to kind of counteract some of the properties of gold, right? So that the fact that they're going to be using some gold reserves to purchase Bitcoin is very telling. Um, but it's also helped driving innovation in , in the United States, right? It , it's showing that we are staying on the emerging forefront with our technology companies. Um, I think a lot of other nation states are gonna follow suit with the United States, which only helps provide our business case as a country to have this because it's gonna help drive supply and demand. Um, so I, I , I mean, I'm excited for it. I think it's going to be very , uh, eye-opening to a lot of companies if the US is going to be having a , a Bitcoin reserve, I think a lot of companies are gonna follow suit by putting it on their balance sheet 00:12:47.134 --> 00:13:39.933 That assume so. Yes. And to add just one point to the transparent ear , I don't believe that there was any , um, timeline for having the US government actually buying more Bitcoin as of right now. 'cause I know there are people that are on both , uh, both angles, right, of this. And so as of right now, you know, there is no timeline for having the government buy additional Bitcoin. The SBR at this point in time is, is only gonna be comprised of the current holdings of the US government that until now been held in other accounts via , uh, or that hadn't seized via court order and alders. So as of right now, you know, there is no tax money being spent on any of these additional crypto assets. I always like to make sure to be, you know, totally 00:13:40.495 --> 00:14:24.284 No, it's , it's , it's a great , it's a great point because I think, and it goes with a lot of what we'd be discussing today already . 'cause a lot of folks, when they get into digital assets, right, it's buzzwords, hot topics, it's, it's cool, right? And it , it's great to have that clarity because I could easily see the business case where President Trump would make the announcement of a strategic Bitcoin reserve, and then nothing really happens of it, right? It's just that flashy headline. So , um, making that point and, and showing that, okay, there's no open market purchases to date. Here's what it's gonna be made up of. And maybe who knows when we'll cross that bridge. But , um, it , it , it's always important because I think as you'll see with this space, there's a lot of flashy headlines and cool things to be doing. 00:14:25.995 --> 00:15:21.764 Absolutely. And, you know , um, to building on that, this comment Mark, you know, obviously, you know , there are headlines that are around Bitcoin, around crypto, and the, and the Trump Whitehouse has been openly pro crypto and pro innovation, right? So how are your current clients that are handling that, right? Uh, one in terms of the optics of it, right? Because there are politics involved in everything. And two, in terms of, is there any indication that by introducing acts like the Genius Act or the stable act , both of which are targeted to try

to get dollar backed tokens into the mainstream, is there any inkling, are there any current conversations about the appliance moving more towards crypto being used either on the balance sheet or as a medium of doing business? 00:15:23.605 --> 00:17:51.005 Yeah . What , what we're seeing a lot , um, especially a lot of companies like in the proposal stage that are coming to us now , um, again, me being an auditor coming in late, I'm not a , I'm not a tax guy, right? So companies from day one need a tax advisor. But when I really come into play is when companies have that audit requirement and what, what I'm seeing a lot of companies start to peruse and talk about , um, is the potential IPO readiness, right? I think as we've had some of this pro administration, it's also on the SEC forefront that it's going to be, not necessarily easier, but you're not gonna get as much pushback mm-hmm . Being a digital asset company trying to go public and be A-P-C-O-B registrant. So , um, a lot of people thinking of the IPO route for their business, where the future they could go in the next year or two. Um, so we're having a lot of those discussions. Um, like a lot of other companies, we're seeing a lot of folks toss around the idea of moving some treasury assets into a digital asset for a long-term investment. Um, so kind of working with them to show what are the internal controls, the risks around doing. So it's very different than a cash account and setting that up. Um, so making sure they understand that from the beginning before going down that route. Because once you do that, it's tough to go back. Um, you don't wanna make any fat finger mistakes or anything like that when you're, when you're setting that stuff up. So , um, making sure they understand the risks , um, and talking them through the , the various hurdles there. But the other piece that I think could open the door for a lot of companies is , uh, the fact that when , when President Trump came into office, was he repealed SAB 1 21, right? So there was a big compliance hurdle there, like you mentioned , um, on the compliance forefront with, with sab, ironic , SAB 1 22, repealed SAB 1 21. Um, not to get confused, but that was a big compliance hurdle for companies that were custodying client assets, right? So having the corresponding liability and asset on the books on your balance sheet , um, and almost acting as like a bank where a lot of these companies where facilitating like almost like money transmitters and trying to act as a middleman , um, where did they fit in the crypto landscape , um, under that compliance. So I think repealing that helps open the doors a little bit and ease the financial burden on a lot of companies that , um, might not want to go down that route and don't have a viable path. So I think it helps make their possible, their future a lot more possible. 00:17:52.015 --> 00:19:19.285 Well said. You know, and, you know , the whole pro blockchain pro tokenized asset approach

has been in place or has been put into place, rather with the SEC and also just earlier in, in March, in March, 2025, the OCC and I believe also in 20 20 25, the FDIC have also issued dated guidance , uh, ative letters , um, trying to clarify what, what services and products can be offered by banks to current customers and clients who are trying to engage in this ecosystem. So yeah, I would say that overall, right, the outlook and the headset and sort of market , uh, sentiment has gone from being, you know, cautiously optimistic to more just plain optimistic. So , and I know, and I know that you had mentioned, you know, the importance of internal controls having a plan in place prior to buying any , uh, assets in this space for any wallet management and all the rest. Is there any one piece of advice, or is there any one question that , that you and your team are having to answer most often as you have clients that are, you know , talking about, thinking about entering into the, you know, broader tokenized asset space via the IPO route or some other ways? 00:19:20.204 --> 00:20:41.015 The , the , I think the biggest piece when it comes to is around wallet structure, right? Um, you mentioned the internal controls, like we talked about earlier briefly, but have walking them through the capabilities of what digital assets can offer with a self custodial option versus the traditional bank or having a qualified custodian like a Coinbase and knowing your assets are at a third party, talking them through the various differences between the two, the importance of the, the two. Um, 'cause one definitely has a , a easier administrative burden, right? If you just put your simple username and password, it's like any other website that we have. Um Yep . But then the controls around that, right? What, what are the two factors in order to initiate and authorize transactions? Um, what's the security, if you have self custodial, is who has the private keys? How are they backed up? Um, so talking clients through those various options, I think is where we're seeing, I don't really call it like a pain point, right? But it's, it's a question we get all the time of what do you see with your other clients and what do you see as best practice? Right, exactly . So there's a couple different routes to go, both with both with my professional opinion, both with my auditor opinion, and then both with my personal opinion of where, what answer would suit you when it comes to that. So I, I just like to lay out the various options and talk them through the, the pros and cons. 00:20:42.815 --> 00:21:45.474 Well said. Right? Because every, every client is obviously different and the firm itself has obviously different levels of in-house goal knowledge too. Mm-hmm . So I would say sort of that and also the sort of risk appetite is also gonna play a, a role in that, but I won't want to ask you to answer any of those obviously. But , uh, you know, tossing out some other points that might play a, a , uh, mm-hmm . You role there. Um, so in terms of sort of , what are you and your team, right? So right now, as of our , uh, as of our conversation, it is March 25th, so we're already done the first quarter of, of 2025 . So if I were to ask you to give me your most solid forecast or expectation for the balance of the year, what is that gonna be in terms of blockchain and , uh, token organized assets? 00:21:48.105 --> 00:22:54.845 Um, yeah, I mean, for 2025, I think we're going to con , continually see movement on the regulatory front. I see . I think we'll see more and more companies, not to the same scale, but following what MicroStrategy has done mm-hmm . And putting that on their balance sheet just to see the success that Michael Sailor and , and MicroStrategy have had. Um, kinda alluded to that earlier. But I think we're gonna see more and more companies do that, particularly in the public company side. Mm-hmm . Um , we're seeing a lot of institutional companies get into this. There's a lot of ETFs popping up now that in 2024 we had Bitcoin, ETF approval shortly, Ethereum, ETF approval , um, I believe , uh, Solana ETF is in the works, and there's also a sui , S-U-I-E-T-F that was just , um, registered. So I think you're gonna see a lot of movement on that front for additional investors to get into this space through those types of EETF vehicles. Um , but as far as like me and my team, I mean, what I'm excited about is continued clarity on the accounting front, right? So, not to get too into the weeds, but we had 00:22:56.045 --> 00:22:59.125 Come on in the wes with me . Come on, let's go. 00:22:59.924 --> 00:24:56.015 It , it , it , it was an interesting release about a little over a year ago in December of 23 with the fasbi announcing the new fair market value standard, which we've awaited for a while . Um, with the timing of that release, not many companies adopted it last year because it was so quick and trying to figure out the various challenges to do the adoption, but mm-hmm . Right ? Right now we're working through with a lot of our private companies , uh, those standards and as well as our public companies that effectively adopted it 1, 1 24 and had the full year to go through your quarterly 10 Qs, go through your 10 K for the audit that we're issuing , um, issued now or to be issued in the next couple days. Um, but following private companies love to follow the private company disclosures and suit and seeing that those are now live and running and companies had time to fully adopt that new measurement. Um, it's, it's, we're at a place now where we're working with our private companies of, okay, how to do this in a practical approach, right? Because it's, there's a little bit of a lift there, finding out your principle market, finding out your price points, your accounting policy, the new disclosures, your crypto roll forwards by token. Um, so we , from the accounting side, I'm excited to do that and lay that f framework out , uh, for a lot of companies we're going through that new adoption of that new standard, which is something we all wanted. So we're finally here, we're finally feeling it, which is nice. Um, and I think it's gonna be a lot more representative for the companies that we work with , um, and their financial position on their balance sheet instead of carrying that impaired asset at as minimal cost as possible. Um, finally have a good value on your balance sheet for your digital assets. Um, but no, I mean, I , I , I think as a whole 2025, we're gonna see a lot of exciting pieces on the regulatory front. And then I'm curious to see where we go with tax compliance. Um , I know there's a lot of things out there right now. We're trying 00:24:56.375 --> 00:24:58.095 It's all the wax though . Yeah. Yeah, 00:24:58.575 --> 00:25:10.015 It's , there's a lot of balls up in the air and I don't know which one's gonna land first, so just trying to see where this year shakes out with the new administration , um, is gonna be interesting. So we're definitely gonna be following that closely. 00:25:11.505 --> 00:25:28.884 Well said, mark and Mark , it's always a so privilege, you know , to have you here on the podcast and also wanna publicly give Mark kudos for , uh, being named partner recently, Matt , with well earned long time coming. Mark, it was an absolute blast having you here today. 00:25:29.375 --> 00:25:32.964 Thank you very much, Sean . It's always a pleasure. Happy to do this whenever you want, man. I'm always down to hang out. 00:25:33.464 --> 00:26:15.884 Thanks, mark. If you have watched this whole episode and you aren't yet a member of the NJ cpa , a emerging TE technology interest group, go on to nj cpa.org, black groups and, and , uh, join. And every episode of the podcast Tech and otherwise are all online at nj cpa.org/podcast . And also on Apple, Spotify, and on YouTube and all of our crypto blockchain content articles, podcasts, webinars, all the rest is all online@njcpa.org oh slash hub slash crypto. Uh , thanks everybody and have an awesome day .