Cryptocurrency is quickly becoming less of a fringe investment as banks, financial institutions, and even certain countries look at establishing their own digital-only currencies. The latest statistics show that over $10 billion worth of cryptocurrency changes hands each day, with a total market cap of $200 billion.
Currently, the U.S. has no one standard for reporting on cryptocurrencies, but that may soon change. Movement from the IRS and SEC indicate the field is moving towards regulation, requiring compliance with any rules put in place by governing bodies. Additionally, as companies and organizations hold both crypto and non-crypto financial assets, there’s a need to ensure the two systems are integrated.
The two were working on a request for an accounting firm client that required them to audit bitcoin assets — to cross-reference and report on the blockchain transactions. In the process, the team ended up building an entire tool to conduct a cryptocurrency audit.
Now, they’ve expanded that tool into Verady, a startup that provides their services for a host of clients. Verady both audits and accounts for blockchain transactions — the former to make sure you meet regulation and investor requirements, and the latter to integrate your cryptoassets into any existing traditional financial structures your company has.
“Verady believes traditional accounting systems, firms, and standards are currently lacking functionality around cryptocurrencies,” says Canty.
Founded in 2016, the startup now has 7 employees and went through this year’s Coca-Cola BridgeCommunity commercialization program. Last month they secured a strategic investment from Riot Blockchain, a publicly-traded company that focuses on investments and hardware in the cryptocurrency space, and they’re currently raising additional funding to hire and scale.
They’ve also secured partnerships with accounting firms, like Atlanta-based Acuity, to provide their services for clients.
“Crypto companies preach transparency, but few people know what to do when it comes to accounting. Crypto protocols are so different from legacy bank access and fiat transactions that most accountants are stumped and can’t get past the decimal place issues,” said Matthew May, Acuity’s COO, in a statement.
Verady’s primary product is called VeraNet, a platform where financial institutions, corporations, and individuals can audit, account, and report on blockchain assets.
“VeraNet will be the bridge between cryptocurrencies and traditional financial accounting which is needed to further their acceptance and growth,” says Canty.
“Accessing any Blockchain records for financial history or reports requires establishing a blockchain infrastructure, detailed programming skills and other specialized blockchain knowledge. Our product, VeraNet, abstracts away the complexity of the underlying Blockchain(s) and provides the information requested in an easy to consume manner for traditional financial services,” he says.
Through the VeraNet platform, a company or organization can see a visual dashboard, detailed transaction reports, high-level summaries of their cryptoassets, and more. It’s partially automated, but ‘Verafiers’ also harvest data and perform blockchain assurance work to ensure everything is accurate.
Verady initially charges companies based on specific audit engagements. There are also recurring models — a subscription-based audit service that provides continuous asset assurance for the corporation and their traditional accounting firm; as well as a subscription-based accounting service for continuous monitoring and integration.
Next up for the company? Canty says they intend to develop additional partnerships to bridge the blockchain and traditional finance worlds, build out their product, and explore new offerings to cater to a growing client base.