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How to scope crypto compliance work
How to scope crypto compliance work

A practical guide to scoping crypto compliance work for accountants

Updated over a week ago

If you're just starting to do compliance work for clients with crypto investments, then this guide is for you. We'll go through some of the important considerations when scoping client work involving crypto investments.

Client complexity

There are two types of crypto clients in Australia, those with simple crypto activity and those with complex crypto activity. The good news is, that most taxpayers in Australia do have relatively simple crypto activity that can be easily solved.

Simple crypto clients

  • On Australian exchanges

  • < 1,000 transactions

  • Investment purpose

Complex crypto clients

  • On International exchanges

  • >10,000 transactions

  • Automated trading activity

  • On-chain DeFi, NFT activity

  • Lending and borrowing

  • Derivatives products

Tip: We recommend focusing on clients with simpler crypto activity when you're first getting started. Complex crypto clients often require significant in-house expertise which takes time for your team to develop.


Scoping work

Before engaging on a client with crypto you should scope the work to determine whether it's a simple vs complex client.

Collect and review all transaction records before proceeding

  • Ask your client which locations that they had crypto activity. This includes any exchanges, platforms, wallets or other services.

  • For each location, request the following:

    • A complete transaction history including their trades, deposits, withdrawals and any other transactions that occurred on their account.

    • An account statement of their balances on 30 June, or if not available, a screenshot or export of their current balances.

    • For their blockchain wallets, you can request their public address.

  • Ask your client if they did any of the following:

    • Borrowing or lending.

    • Derivatives trading.

    • Trading on behalf of another person.

    • ICO investments.

  • Ask your client if any of the following happened to them:

    • Transaction records that can't be accessed.

    • Insolvent exchange that is no longer operating.

    • Lost, stolen, scammed investments.

The answers to these questions will give you a good indication of the scope of work. If it's just one platform, it's going to be very simple. If it's 20 platforms and 50 wallets, where some of the historical records are missing, then it's going to be much more complex and you'll need to budget additional time for the project.

Tip: When reviewing transaction records, look for deposits and withdrawals of crypto. These usually indicate that there is another exchange or wallet involved, or at least a query to the client as to why they occurred. Due to this, they are a good indicator of future scope creep.

Define the scope in the engagement

When you prepare your engagement terms with your client, we recommend being explicit about the scope of work and clearly define the following:

  • What exchanges, platforms and wallets are included.

  • What is the total number of transactions included.

  • What types of activity are being covered (e.g. spot trading, staking, derivatives, DeFi, NFTs).

Defining a clear scope will help set expectations with the client, particularly if you later discover additional exchanges or wallets as you progress through the work.

Define how out of scope work will be addressed

Be clear with the client on how additional out of scope work will be addressed and billed for.

For example, what will happen if the client remembers they had another exchange platform they were trading on that was not including in the original scope?

You can explain the common sources of additional work to your client upfront to help manage expectations:

  • Additional exchanges, platforms and wallets.

  • Additional historical transaction records that were not provided.

  • Complicated on-chain activity such as DeFi and NFT's that require significant manual reconciliation.

  • Deposits and withdrawals of crypto that are not simple internal transfers between platforms.

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