Web 3 Accounting and Reporting

Accounting is foundational to human interaction and business. As new asset classes emerge and technological advancements speed up, traditional accounting rules and software struggle to encapsulate this new digital native economy.

Creating flexible, safe, and transparent financial practices tailored for the digital economy is critical for global business growth and human development, as it will allow companies globally to leverage digital assets while sticking to accounting and regulatory rules and keeping their operations sound. This blog will provide an overview of the benefits of Web3 accounting and share best practices to streamline your Web3 Accounting and Reporting.

This Blog is part of a series of Web3 Financial Operations guides and case studies produced by FinOps3. Explore all FinOps3 tools and content on the FinOps3 Platform.

Integrating Digital Assets with Accounting

Digital assets offer benefits over traditional assets, including enhanced transparency, security, and efficiency. However, integrating this new asset class into traditional accounting frameworks has challenges. The primary hurdle for many financial managers is consolidating crypto transactions with conventional financial records, often managed manually through separate sheets and legacy software.

The introduction of platforms like Coinshift and Den represents a shift towards simplifying Web3 accounting and reporting. These platforms stand out for several reasons: they ensure better custody and control over digital assets and offer a comprehensive toolkit to seamlessly integrate on-chain transactions into accounting practices.

Both platforms have facilitated hundreds of millions of dollars of digital asset transactions, enabling integration with traditional accounting systems such as Quickbooks.

Get started with on-chain Accounting and Reporting

Creating a Safe Wallet is the best option for fully controlling your assets and having complete access to all Web3 applications while remaining secure and efficient. If you don’t have a Safe Wallet yet, follow this guide to get started and gain complete control of your digital assets in minutes.

Coinshift‍

Coinshift is a complete treasury management and accounting solution founded in 2021 that offers features such as transaction management, comprehensive reporting, a user-friendly interface, and integration with different DeFi applications. The solution ensures financial operations are both structured and easily reportable.

Setting up a Coinshift Account

Starting with Coinshift is simple and only takes a few minutes if you follow the steps below.

• Access the Coinshift V2 Beta: CoinShift is currently in semi-private Beta, allowing a limited number of users to engage with the solution. Follow this link to get access and start using Coinshift.
• Create a New Organization: After signing up, create an organization. The organization space allows you and your team to collaborate and manage your digital assets efficiently.
• Add Accounts (Safes & Wallets): The final step involves adding one or more accounts. This action allows you to manage all your crypto assets through Coinshift’s unified dashboard, ensuring a streamlined overview and control of your financial operations.

Den

Den provides a self-custodial, multi-signature wallet for on-chain organizations. Den offers batch token transfers with just a few clicks and the ability to simulate transactions before execution. Additionally, it features automatic notifications for multi-sig signers through various platforms and simplifies on-chain accounting by categorizing transfers and tracking assets comprehensively.

Setting up Den

• Create an Account: Sign in using your wallet on Mainnet to establish your user profile.
• Existing Safes: Den automatically fetches any existing Safes where you are a signer across all supported networks.
• Creating a New Safe: Den lets you create new Safes, while also allowing you to manage Safe owners.

By following these steps, you'll be well on your way to leveraging Coinshift or Den for your organization's accounting and reporting needs.

Best Practices

Adopting Web3 invoicing presents unique challenges but also offers innovative solutions for smoother operations. Here's a breakdown of common challenges and best practices for businesses navigating the Web3 space.

• Use proven accounting solutions: Use proven solutions such as Coinshift, which add essential features such as insights into your on-chain cash flow, risk management, and various reporting resources.
• Leverage automation to speed up your workflow. Take the time to set up automatic labeling in your Web3 accounting solution to reduce manual effort and minimize errors.
• Check up and audit regularly: Regular audits of accounting processes foster accountability and ensure compliance. Internal controls, such as segregation of duties and access controls, should be implemented to safeguard your financial operations.
• Stay up to date with regulation: Given that digital assets are constantly evolving, staying informed about the latest legal and financial requirements ensures your financial operations remain compliant.

FinOps3 is a platform and knowledge hub for Safe-powered on-chain finance. It aims to accelerate the adoption and retention of Treasury Managers and Financial Operators in the Safe Ecosystem by providing resources and guidance that make setting up and running a Treasury Management System powered by Safe easy and rewarding.