In a new interview with Blockbeat by CityAM, Bitwave Co-Founder and COO Amy Kalnoki shares her thoughts on the state of the digital asset accounting industry and reveals key challenges that businesses face today.
This blog below contains quotes from the full interview – check it out to learn more about our mission and how we're empowering enterprises to thrive in the digital asset economy.
From handling billions of transactions to partnering with industry giants, Bitwave is leading the charge.
About Building Bitwave
Amy Kalnoki: "From day one, Bitwave’s mission has been to enable digital assets for enterprises. We set out to build a comprehensive platform and suite of tools for everyone working under the CFO’s office. This includes accountants, bookkeepers, tax professionals, and operations and FP&A teams. Our tools help them do their jobs and maintain proper books and records when their business is transacting in digital assets.
Blockchain offers the opportunity to revolutionize systems with new ideas and products. Working in the digital asset and blockchain space is particularly appealing because of the innovative and experimental nature of the industry. People are developing a lot of cool stuff and trying new things, making it a great industry to be part of."
Partnering with leading accounting and tax professionals is key for us. We invest in and value these relationships.
"Additionally, we partner directly with blockchains and leading enterprises in the digital asset space. For instance, we were recently added to the Circle partner network and are a Coinbase partner. We also have large integrations with Stellar and other foundations and blockchains.
When working with custodial providers or exchanges, our goal is to help their users manage accounting and track digital assets moving in and out of their businesses. We also partner with ERP providers, such as Netsuite, Sage, QuickBooks, and Xero. Bitwave acts as a crypto-specific subledger, integrating with these ERP systems to ensure blockchain data is accurately reflected in users’ accounts. Having strong technology partners is also crucial for us."
How Bitwave Works
Amy Kalnoki: "Bitwave aims to sit between the blockchain and your digital asset data sources, as well as your ERP or general ledger system. We provide the workflows and tools needed for accounting, bookkeeping, tracking, and management."
You can still use platforms like QuickBooks, Netsuite, Sage, Oracle DB, etc., as your ERP, and Bitwave will integrate all the transactional blockchain data into our platform.
"We bring in data through various methods. We integrate directly with the blockchain, run nodes, and sometimes use read-only APIs for custodial or exchange accounts. Our goal is to have a complete picture of the transactions and the movement of crypto in and out of the business to ensure accurate accounting."
How Bitwave Solves Accounting Challenges for Enterprises
Amy Kalnoki: "Accounting for crypto is extremely challenging. Unlike any other asset, it functions both like foreign exchange and inventory. It’s an inventory item with a fluctuating price, yet you don’t pay people with inventory. This makes crypto accounting highly complex and unique, and it’s currently the only area in accounting that is constantly evolving with new guidance being issued regularly.
Traditional accounting software typically supports only up to two or four decimal places, whereas crypto can require 16, 32, or even more decimal places. This discrepancy created a significant need for specialized accounting software for crypto."
Businesses using digital assets were resorting to manual spreadsheets, which is not only time-consuming but also lacks auditability.
"As soon as businesses began transacting with digital assets—whether buying, selling, taking revenue, mining, minting, or issuing digital assets—they needed to account for those transactions. However, no software existed to meet this need when we started. That’s why we set out to build a solution, addressing the very real and difficult challenge of crypto accounting."
Bitwave for High-Volume Transaction Businesses
Amy Kalnoki: "Bitwave has been around for almost six years and we have hundreds of clients, exclusively businesses."
Bitwave manages over 40 billion transactions annually for our largest client. We excel with enterprise clients who handle a high volume of transactions.
"The sheer volume of data is unique to digital assets and the blockchain. People are doing an incredible amount on the blockchain, which has driven the evolution of Bitwave.
One significant development in our product is what we used to call the data warehouse, called Data Fusion by Bitwave. This feature provides robust capabilities for working with and transforming data. Our reconciliation and revenue recognition engine can process and account for the extremely high volume of blockchain data. The staggering volume of interactions on the blockchain underscores the need for such powerful tools."
Saving Time with Bitwave
Amy Kalnoki: "We’ve seen many clients transition from a very manual process to using Bitwave, which has been transformative. For example, clients used to manually handle revenue recognition by looking up transactions on Etherscan, copying the data into a spreadsheet, finding the price of ETH at the time, and then entering everything into QuickBooks as individual entries. This manual process took hundreds of hours.
Bitwave imports the fair market value at the time of the transaction directly into our software, matches it with the transaction in your wallet, and syncs with your chart of accounts, customer accounts, and expense accounts from your general ledger or ERP. Our bookkeeping workflow matches everything, and our rules engine suggests categorization for transactions. In just a few clicks, you can reconcile transactions, track gains and losses, and generate gain/loss reports when disposing of assets like Ethereum."
With Bitwave, this process is streamlined and automated, which can save hundreds of hours
"For large exchanges or layer one blockchain protocols handling millions or billions of transactions a month, manual processes are impractical. Bitwave makes managing such large-scale transactions feasible."
Why Institutions Love Bitwave
Amy Kalnoki: "We have a specialized version of our platform called Bitwave Institutional, designed specifically for financial institutions.
This includes a full suite of tools for FBO accounting, which is crucial when custodying digital assets for others, as it involves tracking gains and losses due to constant price fluctuations. We also offer features like segregated client reporting, segregated accounts, sophisticated provisioning, and various roles within the product."
Our platform excels in accounting, revenue recognition, accounts payable, invoice processing, client reporting, data management, and FBO accounting.
"While every digital asset environment is unique, we pride ourselves on how adaptable our core offering is to these diverse setups. This adaptability has allowed Bitwave to thrive, especially in different jurisdictions with varying tax and accounting requirements. With Bitwave, you can tailor the platform to meet the specific guidance provided by your local tax advisor or accounting professional."
Closing Thoughts
Amy Kalnoki: "I believe businesses shouldn’t shy away from using digital assets. When a company wants to use NFTs for marketing or stablecoins for same-day invoice settlement, the CFO or finance team shouldn’t have to say no because of accounting concerns. My message to finance, accounting, and tax professionals is that with Bitwave, you can offer these services while keeping your books and records in an auditable manner.
Bitwave ensures that you can integrate digital assets into your business operations without compromising on financial accuracy and compliance."
Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as tax, accounting, or financial advice. The content is not intended to address the specific needs of any individual or organization, and readers are encouraged to consult with a qualified tax, accounting, or financial professional before making any decisions based on the information provided. The author and the publisher of this blog post disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use or application of any of the contents herein.
