Welcome back to Inside Basis, our flagship newsletter for all things crypto accounting and tax. We had an absolute blast in New York last week at the Crypto Finance Forum and Mainnet. We buzzed between happy hours and brunches, soaking in the convos about the SEC’s “anti-crypto army”, all the startups doing ZK tech and questions around “Am I a broker?” If you didn’t catch us, no worries - connect with us on on Twitter or at gm@hashbasis.xyz.

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Hash Basis Beat

What’s new in the Hash Basis universe?

Our website got a facelift! We loved the original hashbasis.xyz, but we decided it was time for a refresh to showcase our updated services, pricing and content. On the offerings side, we are switching to a monthly subscription model for business accounting. Gone are the days of surprise bills from your accountant, with each hour of work outlined and scrutinized. At Hash Basis, we strive to be your business partner in all matters and be available whenever you need us.

If you’re not a business looking for monthly accounting, we also have some tasty options on our 'A La Carte' Menu: subledger implementation, individual tax and consulting on digital asset accounting matters (i.e. revenue recognition under GAAP). Hash Basis is growing up!

We have another exciting update for September - Mackenzie is one of the instructors at the Crypto Accounting Academy, a premier course offered by the Accountant Quits podcast! 🎉 Mackenzie is teaching Week 2: Block Explorers and is going (painstakingly) deep into the universe of Etherscan, indexers, reconciliations and Github. Her lesson will be an accumulation of everything she’s learned about these finicky but essential tools of crypto accounting. If you have any questions about it, please reach out!

To round off our HB updates, here are some photos from our phenomenal time in the Big Apple. 🍎 Shout out to Cryptio for the awesome conference and all of our customers & ecosystem partners that invited us to your events. We love hanging out IRL!

We Read Crypto Twitter

(So You Don’t Have To)

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

FASB Board Meeting Spices Things Up

On September 6, the FASB had a board meeting to discuss the Accounting for and Disclosure of Crypto Assets proposed standard (taking into account all 83 comment letters submitted). In just under two hours, the board arrived at a set of tentative decisions, the highlights of which include:

• early adoption is permitted (so likely 1/1/2024) with the change officially going into effect for fiscal years after 12/15/2024 (for most businesses, this is 1/1/2025)

For additional commentary, check out this insightful summary by Jeff Rundlet.

Koinly Launches an Integration with QBO

Koinly, the crypto tax software based in London, recently released an integration with Quickbooks Online! While Koinly has traditionally targeted individuals, they are clearly pivoting to serve businesses as well. I tested out this feature the other day and had a few thoughts:

• To my surprise, the integration worked well the first time! I synced one transaction and a few seconds later, it popped up in my “recent transactions” in QBO with all parts intact
• The customizability in account mapping is low: you can only pick one account to map digital assets, cash, fees, income, expense, realized gain & loss and gifts/donations to. For companies with more complicated books, it’ll be tough to use Koinly
• Reporting still needs to catch up with the new integration. Typically, I’ve seen reports such as “synced transactions”, but Koinly still has their usual tax reporting (accounting reports such as the journal entry report are also missing)
• For now, the price hasn’t increased for users. Their bulk package licenses (which we use at Hash Basis) still have the same pricing:

Overall, it’s a great option for low complexity and price sensitive companies, but the hardcore crypto accounting functionality is absent. I’m curious to see how this develops in the future!

Basis Bytes

Practical tips & tricks for all the crypto accountants out there (as confirmed at the Crypto Finance Forum, there are more than 5 of us!)

Today’s tip will be highlighting The Graph, a decentralized protocol that indexes on-chain data via subgraphs. It lives on top of Ethereum and has a rich ecosystem of actors, from indexers (aka validators) and delegators to arbitrators and curators. The tokenomics are incredibly complex, but we’ll be zeroing in on the staking mechanism.

Whenever a delegator stakes GRT to an indexer, the tokens leave the user’s wallet and are deposited into the Graph staking proxy contract (example transaction here):

However, the full amount of the delegated GRT isn’t actually staked. As Etherscan shows, 0.5% of the GRT amount is whisked away into the ether or “burned” (see the Null: 0x000...000 address). The Graph deems this the “delegator tax” and their reasoning for the automatic burning is:

“Delegators cannot be slashed for bad behavior, but there is a tax on Delegators to disincentivize poor decision-making that could harm the integrity of the network.” Source: The Graph docs

The delegation tax appears in the UI when you’re going through the staking process, but it’s not immediately evident, especially if you’re a crypto accountant who didn’t execute the transaction. In my example, 5,000 GRT was delegated, which means 25 GRT was burned (5,000 GRT * 0.5%).

Journal Entries for this Transaction 💡

This assumes the FMV of 1 GRT = $1 and the cost basis for 5,000 GRT is $6,000.

Delegating 4,975 GRT - No journal entry since these tokens are staked (still on balance sheet)

Burning 25 GRT

If you’re hankering for more Graph info, see here for our latest article on accounting challenges on The Graph. And if you’re ever in San Francisco, be sure to stop by the beautiful House of Web3, the headquarters for Edge & Node (the software company behind The Graph!).

See you in October! 👻