Hartford Business Journal

24 HARTFORDBUSINESS.COM | March 14, 2022 FOCUS: Accounting Accounting firms see more cryptocurrency business, as companies take cautious approach with decentralized money By Michael Puffer mpuffer@hartfordbusiness.com T o many, cryptocurrency remains a dubious curiosity tied to stories of unbelievable gains and dizzying losses. For Justin Wilcox, a partner with Glastonbury accounting and financial consulting firm FML, cryptocurrency accounts for about a month of his work year. In 2017, FML had a single client who needed help accounting for crypto assets. Today, the company has one to two dozen clients with increasingly complex investments and ventures based in crypto technology, Wilcox said. "We get more and more inquiries every year," Wilcox said. "More and more I am assisting other partners with clients who dip their toes. It's a trend that's moving up positively in terms of people getting involved." Cryptocurrency isn't being widely used as a means of transaction in Connecticut, but leaders with major accounting firms said an increasing number of people are making it part of their investment portfolio, or establishing businesses around its exchange. For Wilcox, crypto is also something of a private passion. He owns two "mining" machines that perform complex calculations as part of a network of crypto miners. As the network solves complex equations and adds to the "blockchain" ledger by recording cryptocurrency history, the collective ownership is rewarded with units of cryptocurrency. Wilcox, 33, said he first heard about cryptocurrency on internet forums around 2011 or 2012. Back then it looked to him like a spam ad. But as crypto kept cycling back into the headlines, Wilcox began to investigate. "I said maybe now is the time to get a little more involved," Wilcox said. He found a whole community had formed around the idea of an alternate currency that was decentralized, democratized and not bound by a central authority. The more he learned, the more he wanted to help the concept gain traction. "They didn't need me to be a coder, but a lot of people got in over their heads with tax issues and international reporting issues," Wilcox said. Ethan Brysgel, national financial accounting and advisory services leader for Marcum LLP, said his firm went from one or two clients with cryptocurrency needs two years ago to dozens today. Most clients hold cryptocurrencies as an asset that could gain value, Brysgel said. About eight or 10 clients need auditing help related to crypto and four or five more need help with internal financial controls for crypto businesses, Brysgel said. Some of Marcum's clients are involved in developing new cryptocurrencies. Others have developed digital exchanges brokering crypto assets, Brysgel said. "They are getting revenue like any other exchange based on trades happening," Brysgel said. "There has been a huge wave of evolution in the types of companies we are working with." Out of Brysgel's 75-member team, three people work full time on crypto- related services, he said. Where is the value? Cryptocurrency, in very basic terms, is units of value that can be exchanged digitally with a record rooted in blockchain technology. That record is purportedly immutable, shared out in a distributed network that shows a clear record of ownership and transfer. For some people, the currency is attractive because it is an alternative to currency held and controlled by a centralized authority, Wilcox said. Instead, it is a "social contract" in which crypto currency units are collectively assigned a value and can be traded for goods and services, he said. "The rules of the supply have been determined," Wilcox said. "Everyone in the network abides by those rules. Money cannot be printed whenever someone feels like it." Limited acceptance There are not many places to transact in cryptocurrency locally, at least not directly. One year ago, the website "Coinmap" listed six local businesses that accepted cryptocurrency payment. Now, it lists five. One of those is a permanently- closed bar in Hartford. Staff at another listed site, a Glastonbury steak house, said they do not accept crypto currency payment. "We all have bills to pay and right now those bills can't be paid in crypto," Wilcox acknowledged. Or at least not most of those bills. Not directly. Wilcox uses a computer application to convert crypto assets at points of sale. "I can go with digital Bitcoin, with an intermediary, and the local coffee shop gets U.S. dollars," Wilcox said. "I use one application to go to Dunkin' Donuts and I have used it all around Connecticut. It buys gift cards for me at the point of sale." Adam von Gootkin said his Essex-based Highclere Castle Spirits company has made one cryptocurrency transaction, but has no current plans to make others as many liquor distributors don't deal with digital, decentralized funds. HBJ PHOTO | STEVE LASCHEVER Ethan Brysgel Justin Wilcox

• Cover