Inside Basis Vol. 6: One Last Conference for the Year 👏🏽
Welcome back to Inside Basis, our monthly newsletter for all things crypto accounting and tax! We’ve (mostly) recovered from our week in Las Vegas for Quickbooks Connect, and we have a surprise guest appearance in a conference this week (keep reading to find out which one!). In the post-Thanksgiving spirit, we also want to thank you for coming on the Hash Basis journey with us. It’s been an incredibly fun, formative and busy year, and we couldn’t be more grateful!
Hash Basis Beat
What’s new in the Hash Basis universe?
Quickbooks Connect 🧮
Quickbooks Connect in Las Vegas was a blast! Imagine 3,000 accountants cheering wildly for a new chart of accounts feature or the release of “Intuit Assist”, an AI-powered financial assistant. The conference was a tribe of accounting and tax nerds, and we felt perfectly at home. 😌
In between sessions on CAS (“client advisory services”), offshoring talent and how to run a CPA practice, we were treated to the sound spa (Intuit is getting hippie ✌🏻) and decadent evenings in nightclubs. And we got to see Ryan Reynolds!
However, it was clear that crypto accounting is still a nascent field. Whenever we told someone about Hash Basis, they would give us a skeptical look and say, “you work in crypto?!”. Our session on DAO accounting was awesome, but attendance was definitely less than the more traditional tax and accounting talks. Luckily, the people who came were passionate about crypto and peppered me with several questions (which I loved!).
QB Connect was eye-opening and exposed us to the world of trad accounting. It was a universe apart from ETHDenver or Consensus but fascinating nonetheless - and it just reaffirmed our feeling that crypto is very early.
Ensuring Success 👗
Surprise! Mackenzie will be speaking at one last event this year, and this time, she’s flying to Dallas for Ensuring Success 2023. This conference is a live-streamed event that anyone can join this Wednesday, December 6th. We’ll be chatting with Dr. Sean Stein Smith about advising clients that hold crypto on their balance sheet - from wallet security to upcoming regulations, we’ll cover it all. Did I mention there’s also 14 hours of free CPE?!
Hash Basis Broker Regs Comment Letter 📜
We submitted our comment letter for the proposed treasury & IRS broker regulations! In our view, while the regulations are a step in the right direction, there are certain provisions that would cause undue burden on the crypto industry (i.e. the meticulous requirements on the 1099-DA, not to mention the data privacy concerns). Our comment letter explores these issues and more, including the relevancy of the 1099-DA from “brokers” when the cost basis and gain/loss information is likely to be incorrect (especially if the user is interacting with multiple digital asset platforms).
The Tea on Current Crypto Events
Headliner news to pay attention to for crypto accounting & finance professionals
Aerodrome and Velodrome Hacks 👨🏻💻
On November 29, DeFi protocols Aerodrome (BASE) and Velodrome (Optimism) reported a front-end attack on their platforms:
We’ve been following the meteoric rise of Velodrome for a while (read our article on $VELO here), and we have several customers earning returns on the protocol. Velodrome is an all-encompassing DeFi protocol on Optimism where users can swap tokens, provide liquidity and lock their $VELO tokens in return for additional rewards. It’s a well oiled-machine with a neat TVL of $139m right before the hack.
While it’s not clear how much money was drained on-chain, it’s a good idea to check-in on your investments / potentially move them if you’re exposed to $VELO.
Industry Leaders Testify Before IRS Officials 💰
Earlier in November, crypto industry leaders spoke to the IRS about the pressing concerns related to the proposed broker regs. I know we’re mentioning this incessantly on this newsletter, but the regs are a huge change and potential burden for would-be brokers. Testifiers included Shehan Chandrasekera from Cointracker and Marisa Coppel from Blockchain Association, and they discussed topics such as the inclusion of stablecoins, NFTs and the very definition of a broker (i.e. should decentralized entities really be within scope?). If only centralized exchanges like Coinbase were brokers (which makes sense), things would be a lot simpler. 🤷🏻♀️
Practical tips & tricks for all the crypto accountants out there
Decoding Axelar GMP Transactions 🔗
GMP or “general message passing” technology is a hallmark of Axelar, a layer 1 blockchain that enables sophisticated but efficient cross-chain communications. With GMP, users can start on a source chain and send tokens and contract calls across to a different chain. Any blockchain that implements the GMP stack can be plugged into this interstellar web of bytes and payloads. Axelar network then connects all the disparate blockchains and uses its Proof-of-Stake features (i.e. $AXL token) for security and speed. Here’s a simplified view of how GMP works (from Axelar docs):
A great application of GMP is Squid Router, a DApp that enables cross-chain swaps. In addition to the normal swapping feature, users can “boost” their transactions and take the “GMP Express” so their transactions settle faster on the destination chain. In this example, we are swapping 1.1 FTM for 0.334015 axlUSDC. See our Loom video breaking down the token flows here:
If you’re interested in the technical aspects of GMP contract, I recommend perusing this documentation (especially the video tutorial) and writing an example contract for yourself. 🙂
See you next month in our last newsletter of the year! Our December issue will be a roundup of our first year in business, so stay tuned. 🌺