Welcome back to Inside Basis, our monthly roundup of Hash Basis happenings, what’s new in the crypto industry and practical crypto accounting tips you can use on the job. We’re a little behind on our August newsletter because we’ve been busy cooking up some content and innovating in our business model. But we’re back with exciting updates and a quick Koinly tip that will make your jaw drop!

‍

‍

Hash Basis Beat

What’s new in the Hash Basis universe?

‍

‍

‍

In a few weeks, Hash Basis will be flying out to New York City for the Crypto Finance Forum (CFF) and Mainnet 2023! Mackenzie will be speaking at the CFF about token rollforwards, our favorite crypto-native schedule. Token rollforwards dissect the crypto activity of a company and help make sense of all the inflows & outflows - plus, they’re going to be a required schedule per the proposed FASB rules!

Tickets to the CFF (happening on September 19) can be purchased here. Hash Basis will also be hanging out at Mainnet 2023, so drop us a line if you’d like to meet up.

After NY, Mackenzie will be headed to Las Vegas in November to present at Quickbooks Connect, one of the biggest accounting conferences in the United States! Mackenzie’s topic is Implementing DAO Accounting using QBO, a Crypto Subledger & Other Crypto-Native Tooling (phew, that’s a mouthful!). Her presentation will get into the history and current landscape of DAOs, crypto accounting 101, how to set up a basic crypto subledger, and flexible DAO-native accounting tools such as crypto debit cards and public treasury dashboards.

DeFi on Optimism, Subledgers 101 and our Favorite Crypto Accounting Resources ✨

It’s been a content-rich quarter for Hash Basis! Catch our latest articles below 👇🏻

Diving into Velodrome, the Feature-Rich & Aesthetic DeFi Hub of Optimism

This article “dives” into the intricacies of Velodrome, an all-purpose AMM on Optimism (which is popping off by the way!). Velodrome is a DeFi dream with incredible functionality related to swaps, liquidity providing, locked $VELO and voting.

Part 1: What is a Crypto Subledger and Why Do You Need One?

We partnered with our friends over at Loop Crypto on this “back to basics” article. We talk about the treatment of digital assets under US GAAP and the IRC, in addition to why companies need a crypto subledger to stay compliant (and sane!). Keep your eyes peeled for parts two and three of this accounting series.

The Hash Basis Roundup of Top Crypto Accounting & Tax Resources

We always get the question ‘Where do I start with learning about crypto accounting?’ This piece (which we’ll be updating regularly) is our take on the best way to start learning crypto accounting and tax. We listed a mix of technical/conversational resources so learners can get both the education and context needed to thrive in this niche industry.

‍

We Read Crypto Twitter

(So You Don’t Have To)

Headliner news to pay attention to for crypto accounting & finance professionals

‍

We asked for it and now we got it: definitive crypto regulations are here! Regulators dropped several bombshells on the crypto community the last few weeks, but at least we have our long-awaited-for clarity.

Yes, Staking Rewards are Taxable as Ordinary Income

On July 31, the IRS threw the Josh Jarrett case out the window and inflamed crypto tax accountants everywhere with this analysis:

‍If a cash-method taxpayer stakes cryptocurrency native to a proof-of-stake blockchain and receives additional units of cryptocurrency as rewards when validation occurs, the fair market value of the validation rewards received is included in the taxpayer's gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards.

We supported the delicious analogy related to baking bread (i.e. staking rewards are like bread - the baker doesn’t pay taxes when she bakes the loaf, only when she sells it), but the logic here is also undeniable. There’s an “accession to wealth” when a taxpayer claims staking rewards. However, in order to be considered income, the taxpayer has to pass the control test: if the staking rewards are locked or nontransferable, they’re not income yet.

Am I a Digital Asset Broker?

Probably yes! The Department of the Treasury released proposed regulations last week that address a wide range of issues including:

The full regs are 282 pages (🥱), so we recommend reading Taxbit’s summary for the quick overview.

‍

Basis Bytes

Practical tips & tricks for all the crypto accountants out there (we know, there’s like 5 of us!)

‍

Our tip for today is specific to Koinly, a crypto tax software for individuals that we recommend to our customers. We often need to add manual transactions related to swapping, liquidity providing, airdrops, etc, but sometimes the same token name shows up repeatedly in the interface:

This issue crops up heavily around LP tokens since there could be multiple pools with the same name (for non LP tokens, it’s easier to choose the right token based on the logo).

To avoid selecting the wrong token (which then pulls in the incorrect price), you can paste in the token contract address directly - for example, I want the SPIRIT-LP token associated with this transaction.

💡Clicking on the Spirit LPs link above generates the page for the specific SPIRIT-LP token the user acquired (0x4Fe6f19031239F105F753D1DF8A0d24857D0cAA2). Copy this contract address into the “Coin” field in Koinly, and a single, shiny pool token will appear:

We’re also stoked because Hash Basis now has a featured partner page on Koinly! Our services are now searchable through Koinly, so bring on all the crypto tax work!

Catch you next month (hopefully on time!) 👋🏻

- Mackenzie & Courtney 🌺