Blockchain technology, along with the adoption of cryptocurrencies, is gaining momentum. The enterprise blockchain market is expected to reach $21 billion over the next five years. Just eleven years on, and both sectors have matured greatly, resulting in well-established organizations taking the technology more seriously as they tackle challenges that come with implementing blockchain and the use of digital assets.
Unsurprisingly, professional services giants are among those taking a larger role in tackling new market challenges.
The Big Four firms and Fortune 500 companies are working with a number of blockchain and crypto companies on ways to combat regulatory uncertainty, interoperability challenges, consensus models and development of the technology.
Henri Arslanian noted that when he first joined PwC three years ago, not many people took crypto seriously. However, he saw fast growth, which drove the company’s Hong Kong firm to start accepting Bitcoin payments from clients two years ago. Since then, PwC has formed “crypto teams” in 20 countries, consisting of 200 people in total that work on crypto-related projects. “Just within the cryptocurrency sector, we’ve conducted over 350 engagements in the last 18 months,” Arslanian said. PwC’s crypto teams are not only focused on tax and accounting challenges, but audit and assurance services are also in demand.
“Although Bitcoin was designed with a trustless ideology, the reality is that the industry still requires trusted entities to catalyze the development of the ecosystem.”
Are audits important?
BC Group CEO, Hugh Madden, says BC’s vision is to make use of digital assets in Asia’s capital markets. In turn, the company must set standards for performance, security and compliance. Madden elaborated on the importance of audits, saying:
“Auditing, like regulatory clarity, provides confidence to all stakeholders that companies are operating transparently and adhering to expected industry standards. As the business of digital assets continues to grow and mature, and compliance and regulatory standards become more robust, auditors will continue to play a pivotal role.”
Madden further noted that it’s complex for a digital asset firm to undergo an audit, mentioning that it specifically involves valuation methodology and proof of control, covering both cash and digital assets. It also includes independent verification of financial records against public blockchain data.
Last year, Big Four firm KPMG as well as Forbes Insights conducted a survey to determine how important auditing and blockchain expertise is for finance executives. The findings show that 79% of these professionals expect their auditor to provide an understanding of blockchain’s impact on their business or the financial reporting environment.
Big Four firm Deloitte and the World Economic Forum also recently released a report on blockchain interoperability. The report brings up a key finding, noting that although blockchains are built for specific industry ecosystems, the technology may work better if all of these were linked together under one framework.
“Providing accounting services for crypto clients and businesses is a good place to start. But we have seen a lot of centralized players try to innovate in the blockchain space and many of them miss the point, as they try to keep control by creating centralized, private blockchains.”
Says Tegan Kline, a former Barclays investment banker who now serves as an independent blockchain business development professional.
Big Four firms in particular have a unique opportunity to dominate accounting in the blockchain space. However, Kline explained that the Big Four’s core competencies need to be revamped to take advantage of what public blockchains offer.
Source: CoinTelegraph: Rachel Wolfson