From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets

Hello and welcome to Niche to necessity, your go to podcast for everything tax and

accounting in the realm of web three and digital assets. I'm Taylor Zork

and every episode we sit down with the top finance professionals and CEO's from

the world of web three to dissect the latest developments, solutions

and best practices in this rapidly evolving field.

Our mission is to demystify the complexities of digital assets and blockchain for

tax and accounting professionals. Whether you're deep in the trenches of web three

finance or just starting to explore the impact of digital assets,

this podcast is designed to keep you informed and ahead of the

curve. Today we have the pleasure of speaking with Pat White about

enterprise digital asset accounting. Pat is the co founder and

CEO of Bitwave, the leading digital asset finance platform for

enterprises. Bitwave automates accounting and finance workflows to enable

seamless regulatory compliance, streamlined payments and unified

data with modern connected with a modern connected platform.

Pat is a recognized software engineering leader and a serial serial

entrepreneur with over ten years of experience building enterprise software,

Intuit, Microsoft 5.9 and fortify software. Now

HP security. He launched an enterprise software

consulting firm, Ally Software, in 2009 and

then later created Sinata, an enterprise search engine that Cisco

acquired in 2016. Pat is deeply involved in the

cryptocurrency space, contributing code to both bitcoin and ethereum,

among other web three projects. He is the co host

of the Defi daily podcast and a University of Southern California

graduate. Welcome, Pat. What's happening? I'm gonna have to update my

bio. I just. I just turned 40, man. I've been programming for way

longer than ten years. I just. I just entered my. I just

entered my second decade of working on this stuff. That's a.

That's pretty funny, man. Getting old, getting old over here.

Hey, hey. You come with even more. More experience than we. More experience.

Exactly. That's right. And. Yeah, yeah.

Thanks for having me today. This is gonna be really fun. Yeah, yeah. So before

we get started, can you just give our listeners a quick overview of Bitwave's mission

and the services that you guys provide? Yeah, absolutely. So, Bitwave, we've been

around since about 2018, so almost six. So six years at this point, which is

crazy. And we started with one simple mission, which is to enable digital assets for

enterprises. So, you know, it's. We're incredibly well known for our accounting

software, our tax, you know, the payment stuff we're doing. But. But honestly,

when we think about this space, we look at this in terms of, you know,

when a. When a business decides to bring digital assets onto their balance

sheet, they just create a whole bunch of problems for themselves. And we,

we aim to help them with all of those various problems. So the first focus

that we have is, of course, the CFO stack. So, so that's the. Everything from

the controller's office to the treasury office to the CFO himself and how he's

doing reporting. But we sort of always keep our eye on all the other

parts of the business that are rapidly changing and how that's all

going. So we are, first and foremost, kind of enterprise

software people, and that's where we like to play.

And we all look forward to this world where the

Walmarts and the Microsofts and all these guys are work with digital assets.

That's the kind of level of software that we tend to build. That's awesome.

Yeah, we got some good adoption here in

Costa Rica, and being able to pay with things and have those payments integrate with

the banking system is great, but it'll be great when, as you're saying, it's

more ubiquitous with the bigger players in the states as well.

Yeah, yeah. So what

inspired the creation of bitwave? Like, what got you started in this industry?

Yeah, it was, it was actually pretty easy. So I got into crypto about

2010. So I've been in crypto forever. I love

crypto. It, it's, you know, I read,

I still remember the first day I read the bitcoin whitepaper. It popped up on

Slashdot, which was like an old, you know, hacker news kind of thing. And it

was a. It immediately resonated with me. So I kind

of got into it right away back then. That's when I did a little bit

of code contribution and things like that. And, and, uh, but unfortunately, like, back

in 2010, there really wasn't, uh, enterprise software play to make

around crypto like this. The companies that you could start in 2010 were either

exchanges, which are very retail focused, or, uh,

custodians, which maybe were a little bit less retail focused.

But back then, custodians was a. It was a totally different ballgame. Like,

I, you know, I don't know if you were in the crypto space back then,

but there was a. There was a company called Zappo, there was a

Switzer swiss company that their foray into

custodianship is they, they bought, you know, one of those swiss bunkers in

a mountain, and they have these like, air gap machines with like, you know,

guys with guns around it. So, like, before NPC and before a

lot of the tech that we take for granted today, custodianship was a guys

with gun business, which is not really the business I ever wanted to start.

And then, you know, then obviously, exchanges were retail. So

2010, there really wasn't a lot of, like,

enterprise software startups to start in the space. So

my co founder and I actually started a different company that was in the enterprise

search space. But fast forward 2017,

we looked around, and 2017 was the summer of

icos. I think about crypto in terms of the summer of

2017 was the summer of icos. That's when chain link did their ICO.

It was two years after ETH did theirs. But there was just, everybody was doing

icos back then. But there was a surprising

number of companies back then that actually were real companies.

So as opposed to before 2017, when most companies were

no board of directors, no physical mailing address,

stuff like that, which binance still kind of is like that, but that's a

different issue. There was finally actual

companies that were really getting to the space that were incorporated

in Delaware. And so Amy and I sat down, my co founder and I sat

down and we said, like, well, what are, like, let's just go through all the

problems these companies are going to run into. And that turned into a list of,

like, it was a PowerPoint that had, like, 40 or 50 items on it, and

the top of that was accounting intact, because that's something that you. It's

really, really hard to do. I had a little consulting shop back then that I

was. I was accepting crypto, and it was a. It was a pain in the

ass to actually take crypto payments. And then, you

know, but then right below, there was things like payments and financial operations,

and, you know, FPA in this world gets to be really, really complicated as you're.

When you're doing Fp and a, that's not just around, uh, not just. It's not

just revenue analysis, but also, uh, forex analysis overlaid on top

of it, which is. Is obviously very complicated. So. So we came up with this

list, and we started out, we went out and we started testing it, and we

found a, you know, we found a great market, and we. We started. We built

what I think was really the first, like, comprehensive solution to this. To this

piece. We've been. I like to think that we really invented a lot of what

is known as the crypto subledger space today. Back then, because we were just

so early on in the space, came up with all the terminology,

all that kind of stuff that folks use. And that was sort of the

history and then we just started growing and growing and growing. Yeah.

It's interesting that these tools, we forget. I mean, some people

forget sometimes that they're accounting tools at their heart. Their

ledgers. That's what they are. Um, it's.

It's funny that. Or I guess it's a little ironic that it's so hard

to account for things on chain. But you're right, it's a huge challenge, uh, just

because there's so many, so much, so many different types of things that that can

be happening on chain. And so, um, you know, parsing those things and

parsing the different sources is really key. And keeping that all organized is. Is a

key aspect of it as well. The way I talk about this is that, is

that crypto accounting is. It is two really

hard problems in one that I think people. People don't always kind of

appreciate, which is the first problem is, it's a data problem. It's a very, very

hard data problem, which is, I think we index something

like ten petabytes of data across all the different

blockchains we work with, all the different exchanges we work on. I mean, it's a

phenomenal amount of data that we're sort of talking about here, pricing data and

everything you do. But so

you have this really hard, big data problem, but then you also have a really

hard accounting problem, because it is. It is incredibly non trivial accounting

challenges, you know, especially now that we're getting into, like, the FASB

2024 stuff is. You know, I think

everyone in some ways wants that to have simplified it. But it absolutely did not.

Like the first cut that FASB did when they added in fair valuation.

It actually made things a lot more complicated, because you have to actually layer in

fair value for certain assets, but still do impairment on other assets. And so

you have this really. I mean, no one does that. That is not a thing

that there. There's not a single other industry out there where

people. I mean, like, impairment itself is one of those things that I think you

talked to nine. You talked to ten accountants, and nine of them have never done

impairment. They would not know the rules for impairment, because why would you, like, what

bookkeeper does impairment? Like, there's. There's, like, three things that are. That are

intangible assets that say on your books, and no one ever

impairs. Like, the only person that ever impaired down their domain name was

FTX. And, like, besides Enron

and FTX, I guess, are the two there. So, like, besides those bookkeepers,

no one else has ever impaired a domain name down. No one like you do

a little bit if you're doing m and a. But again, m and a accounting

is really specialized. So it's not like every bookkeeper you work with is doing m

and a accounting. So it's. It ends up being this really interesting thing that, like,

no one does. No one does this stuff, and then no one does it where

there's. There's no predefined rules. So the fact even, like, Fiske

2024, it didn't simplify anything. It made it so much more complicated,

because now you're doing both impairment and fair value on top of these

assets. Uh, and, uh, and. And having to track more

things in terms of restricted access, tokens and things like that. So it is a

really interesting. It is a really interesting world that we kind of live in,

where it is two incredibly hard technical problems, uh,

that we've kind of solved. And then now we. We've obviously layered in a lot

more on top of that, including institutional problems, which is, how do you deal

with reconciliations at scale payments, which

are very, very complicated in the crypto world. We think of payments as really

easy, but we'll talk about this more later. But payments actually are really

hard in the crypto world. It's one of those things

that getting it right. We have 100 years of, how

do you do automatic categorization and cash application

on invoices from the traditional ach world. And now

we're having to ram jam all that work into a year and a half of,

like, getting it done in the crypto world. So,

yeah, yeah. I mean, we've been trying to set up, like, a

recurring crypto subscriptions payment for our. For our community. And, like,

even that's a nightmare to try to set up as well, because you have to

force people to lock stuff up into a smart contract and all that.

So. Yeah, lots of. Lots of complexity here, for sure. Um,

so could you talk a little bit about the

specific challenges that enterprises face in digital asset accounting

and how bitwave addresses those challenges? Yeah, I think

so. The first challenge is, uh, is a. Is one

of experience. Like, you go into a lot of the enterprises that we sell to,

and. And it is not the accounting team that is driving

adoption of digital assets. Right. It is the web three team. It's the

CTO's office, and it is, the accounting team

is getting their. Their, excuse my language, getting their

asses dragged kicking and screaming into the 21st century.

And, uh, and so, first and foremost, like, you have to build a product

that works with an accountant's mind and doesn't,

it doesn't, like, overload them with

crypto terminology and expect. It's like, you know what? Like,

we. We for a long time didn't even have, like, a dark mode because none

of our accountants would use dark modes. Like, you don't put that in front of

a Fortune 500 companies. Like, no Fortune 500 accountant is like,

oh, all I want my life is a dark mode. Like Netsuite. Just do our

dark mode, guys. And so there's. There's funny things like that where you design

the product to work, like how people think that

are in those. In those positions, in those jobs, and, of course, that

scales. I mean, like, even the bookkeepers we work with, like, whether you're working with

a small company, like, you know, pogbing was a client of ours, love them to

death. They're amazing. Uh, you know, they. You. If you're working with them, they.

They might have people that are more crypto savvy. But honestly, the first

accountant that most of these companies hires is not a crypto accountant

because there's not that many. There's 100 crypto accountants. They're,

like, really, really sophisticated crypto accountants out in the world. So

if you're a growing enterprise like pudgy and you go out to hire an accountant,

like, you're not going to find an accountant that knows crypto. You're going to probably

hire someone that doesn't. So whether you're working with Nikes of the

world or you work with the pudgies of the world, both of them have to

have a full foray into this that works with the way that their brain

as an accountant works and matches the terminology they expect all that kind of

stuff. You have to make data very accessible. That's, again,

you know, no one gets into crypto. Accounting is used to

the scale. Like, if you go work for Walmart, you. You

anticipate, like, if you go to Rev rack at Walmart, you

anticipate that there. That there's real scale there. Like, that's, you know,

you're getting hired for that job. You're coming onto a team with probably a couple

hundred people that do nothing but Rev rec at. At Walmart, and

you're. And you are like, okay, there's probably, like, real scale here. Let's see what

happens. You. You go and you work at a company that's been around for a

year and a half that has, you know, that that

is. Is a, whatever, 20 person company, and you're their first

finance hire. You're not expecting them to be doing more transactions than

Walmart, but that's, that's where we are. Like, you look at most of our

clients, like, most of our big clients, like magic, Eden, Hedera, these guys.

Hedera does 50 billion transactions a year. I

back of the napkin Walmart and I

came to like, maybe they were doing 5 billion

transactions a year, maybe something in that range. There wasn't a lot of public

information about that. But let's just, let's pretend that, like, maybe that's. I think

that's magnitudinally correct, even if it's off a little bit.

So we're talking about a company doing that's. The Walmart's been around for 100

years. They have a thousand person finance team. I'm

sure they have probably, they probably spent over $100 million

with SAP, maybe annually, maybe maybe

every couple, three years. And they're doing a level that is an order

of magnitude less than, like, a client that had, like, Hedera that has

literally, you know, two or three finance people

on the team. And so what you're being asked to do is

unbelievably more difficult. Like, you are being asked to

actually process and handle a volume of data

that is inconceivable to most accountants. And you're actually in a

lot of, a lot of situations, like, the accounts are being asked to

be more like data engineers. Like, they really are. Like, when they're. Because

it's hard to do a bank wreck when you have a billion transactions. Like, you

can't, you can't just open a statement and, like, look at it. You have to

think about those problems very, very differently. So

the experience of the folks that are out there and getting them trained up on

not just bitwave, but on cryptocurrency in general. This is where bitway view and

edas, all the stuff that we do is all about getting more and more people

to understand how crypto works and then the scale of

what they're working on. And then finally, for us, it's just the complexity

of their problems is really quite challenging.

So most of the folks that we deal with have split books. So, I

mean, obviously, like, this even gets to, like, folks like pudgy, like, as Pudgy wants

to go, you know, start getting audited or if they want to go public. And

that's, I don't know if they do or not, but, like, they have to start,

they're going to have two sets of books they have to keep. And that is

not, again, like, this is one of those things. Like, nine out of ten bookkeepers

don't keep split books because they don't care about tax. Like, they take their p

and l report. They ship it to their tax guys once a quarter, and that's.

That's what taxes. But suddenly with crypto, there actually is this deep

expectation that you are keeping two sets of books in some way, whether you're explicitly

doing it or, or you're keeping it as, like a. As an adjusting ledger on

top. You have to have that. So we have to, like, you're taking

folks. This is where things just get so interesting because you're taking folks

that are oftentimes younger because those are the accountants that love

crypto. You have to upskill them into crypto. You have to

upskill them into data, and you have to upskill them into. Into accounting

that they probably have never done, you know, impairment, fair value,

you know, keeping split books. Like, you have to take someone who's, who's younger in

their career and enable them to do all this stuff. And that's. That's the

challenge. That that's how we sort of look at this. Like, bitway. We. We work

on the hardest problems. We work with the biggest clients. We have the best names.

And a lot of this just comes down to, like, how do you get these

folks geared up to handle this challenge and, and have software that basically

makes their life as easy as possible? I heard a good analogy

that that sounds like what you're describing. The tool. You know, the. The ethos of

your tool is like, you know, german engineering in cars

versus japanese engineering in cars. Everyone says german engineering is the best,

but if you have to do things a specific way and you have to know

about the car and follow all their rules. Right, versus

japanese engineering, you just. They know how the end user is going to

use it, so they just, like, they end up lasting longer

because it's more ubiquitous to the actual person that's going to be behind

the software. So on the user end. So. Yeah,

and honestly, like, where it is today is a lot of, you know, a lot

of it is. Does feel like german cars because there's just so much specialization.

And a lot of the goal for all of us is to actually get to

the point where this becomes a little bit easier. And anyone, anyone, because anyone could

pick up a Toyota and drive it, you know, fine. And,

you know, but knowing people could pick up a 1969, you know,

Porsche and drive it, you know, well, so, like, that's the.

It's, it's about kind of getting that level for everybody where it's not these

specialized tools, it's kind of like getting more accessibility to them.

Cool. So you've talked about

Nike, pudgy penguins. Do you talk about any specific

kind of implementations that you did with any of these companies or case

studies where something worked out really well or

anything of the nature like that? Yeah, and I love, we could talk about tons.

And if you guys go to our website, bitwave IO, you can check out case

studies there and all of that. We have a great case study with Opensea. They

have some really, Opensea has some really challenging problems. Good. Because

they, for a, for the first part

of the lifetime of their company that Opensea really busted out

in about 20. Gosh, now I'm getting,

now I'm feeling like, I guess 2020 was the summer of nfTs. No, is that.

No. 2021 was the summer of nfTs. 2020 was a summer of Defi.

2021 was a summer of nfts. 2022

was the. Yeah. So their original

smart contract, they hadn't automated

the royalty payments piece of it. So this came. If anyone

has worked with NFT marketplaces, I don't know if they would. I think

we work with most of them, but they have this challenge where

basically they support royalties. So when a trade

happens in the exchange, a portion of the sale price goes back to

the content creator. When Opensea first started, they were actually

doing that all manually. So what would happen is that all of the money would

come to them and then they would pay out all of them. This was just,

I mean, they were the first, they were the first to do it. So they

had that challenge. So we were so part of the implementation there was

not just handling. I think they were doing 50 million transactions a

year where they're all sales. So

there's 50 million sales a year on chain. They get whatever, a

buck per sale. So it's just like really complex revenue recognition there.

But then they also, when we first started working with them, they were also

picking up a liability off of that where then once a month they had to

calculate those liabilities, track them. They had different royalty

tables and then they had to track token based liabilities, which is

incredibly complicated. We built a bunch of tooling to do that. So we have

in bitwave you can actually create an invoice. So we'll both like, the way Bitweb

works is you can both sync invoices in from your ERP, but you actually can

create an invoice in bitway. This token denominated and then we'll allow you to push

that up to your ERP at fair market value and then even pick up adjustments

on it later. So some really cool stuff around there. So we would allow them

to create token based invoices and then, and then track liabilities, pay the

liabilities out. That's when we started to get into payments. I mean, we're, we're,

we've been, we've been really bullish on payments for a very long

time. But it's been, you know, I mean, it was, it was honestly seen

Opensea operate back then. It was a real eye opener because

it was so obvious that like they had these token based liabilities coming

up, they had to, then they had to pay them in bulk because they were

paying out like thousands of content creators. All of those are really, really

hard problems in addition to all the accounting problems, which are insanely hard, in addition

to the data problem, which was insanely hard. So they just have these stacks on

stacks on stacks of hard problems that ends up being really fun. The

other one I love, I do love talking about Hedera just because it's a, uh,

it's a volume. Like they, you know, basically Hedera makes a,

a 10th or a hundredth of a penny per transaction on

Hedera. Hedera does, it's, you know, I don't know, billions of

transactions a month. And so you're basically doing rev rec

across billions of transactions a month. And that's, how do you roll that up? How

do you scale for it? How do you track it? Uh, how do you, how

do you wreck it? I mean, it's like, wreck on, that ends up being tricky.

Like, how do you know you're not missing, and if you are missing something, how

do you, how do you find what, what transaction you're missing?

Those are awesome. Yeah, that's great. So

going into some of the more regulatory challenges that

are surrounding this industry, how does bitwave enable

its users to stay on top of everything? Like all

of that stuff with regards to technology and regulatory compliance?

Yeah, it's one of my favorite parts about bitwave is that we've been around for

so long at this point that we've just, we've seen it all. Like, I can't

tell you, you know, the first, the first client or maybe the second or third

client we got was doing cost averaging because they

were, you know, for folks that are in the space, you know, you, the history

of this is that very, very early on, there was

before a lot of like the, the well, certainly before all the FASB

guidance, but even before, you know, some of the guidance from, like, Deloitte

and those guys came out, people were treating this like

forex. And so if you're doing forex accounting, you're obviously doing cost averaging on

your inventory. Like, you don't, you don't do lot level tracking of forex. You do

cost averaging. So, like, we, when we first built

bitwave, the first, the first gain loss runner we built was

a, was FIFo, because that's obvious. But then the second one we built was

actually for cost averaging. And so, you know, you end up, we end up in

a situation where, like, we, so early on in

our life cycle, and I'm talking about, like, 2018, when we were just getting going,

um, we were already getting asked for different

ways of doing treatment from almost every one of our clients, and that is

it. And it was so pervasive. Like, different people want different wrapping treatments.

They want different, uh, ways of capitalizing fees. Some people wanted to capitalize

fees. Some people did not want to capitalize fees. Some people wanted to allow you

to wrap tokens, some people didn't. Um, that we ended up building this, this

model. And, and this, I think your, your folks will appreciate this, the folks

who are listening. The way that bitwave kind of works is that

you get your list of transactions, and that ends up, as you go through, do

categorization there. So you book something as debit, digital assets, credit,

revenue. You're essentially building up a base ledger. And then what we do

is instead of modifying your

transactions with cost basis or gain loss information,

like, I think pretty much all of our competitors do, what we do is we

actually have this model called inventory views, where you can take, you

create a set of adjusting ledgers on top of your base ledger, and you

can have as many of these as you want. So you can have, you can

have 100 different inventory views that are using the same set of transactions. So

it's the same set of base facts, but they're interpreting them differently. So

when we go and we do something like wrapping treatments, instead of you as

a user having to actually say that a single transaction is

a wrap transaction or not, what you do is in your inventory

view, you specify what assets you want to treat as wrapped and what you

don't. And so in that way, you could basically have a tax view

that does not that that does wrapping treatments. Because in,

in the tax world, wrapping is still okay. And I think a lot of people

still do that. And so you do a tax view that's gonna be fifo.

No, no revaluation. So it keeps it all a cost basis. And then it

does wrapping. It does wrapping for we've and ETH and WBTC and

stuff like that. And then you can have a separate view. That's the exact same

thing. That is, that's for us, GAAP, which will have

impairment. We'll have wrapping turned off fair value for

three assets, impairment for 100 assets. And those two can

live side by side and you can run those whenever you want. And then as

the thing that's been really cool about that is that when the rules change, you

just spin up a new inventory rule. And so a new inventory view.

And so, like, when folks are going from us, GAAP 23, to the FASB,

the newest FASB guidance, they create a new inventory view. Set a couple

of, flip a few switches on there and then they're

done. I mean, it's, for most of our clients, upgrading to FASB 2024

is a 15 minutes process at most.

So we just, it's one of those things that we, the scale of companies we

deal with and the length of time we've been in the industry, we just think

about this problem very, very, very differently.

Very cool. Yeah, I think that it's important to be on top of that stuff

and to be able to have different views of that and unlimited different views of

that as things change is really cool to be able to flip those switches and

things like that. I'd like to switch gears a little bit now and

talk a little bit about the enterprise digital asset summit that you guys host

and just get an overview of that and what makes it

unique in the digital asset space.

Yeah, so we were really the first folks to host a finance

focused digital asset. We did this three years ago.

So this is our third year doing the summit.

We traditionally been doing it around consensus, but this year we're doing it around

BTC Nashville, which will be super fun. The goal of enterprise of

EDAs has always been to bring together like

minded individuals who are, who are thinking about how

we increase the enterprise and business adoption and institutional, of

course, adoption of digital assets. And that's, a lot of it is around

accounting. A lot of it is around, is around, you know, everything we've been talking

about here, you know, how do you, how do you stay up with the most,

the most up to date regulatory frameworks, all that kind of stuff? A lot of

it is about thought leadership. Like last year, we had the, the folks

from one of the streaming payment,

you're talking about subscriptions, one of the streaming payment providers came and talked

about this from a thought leadership perspective about how streaming payments

are going to hopefully one day change everything. Now we're still, I think we're all

still waiting for streaming payments to really hit. But,

but we do want to see that happen. And like, we are, we're excited. So

it's a combination of the absolute, like top of the line thought leaders

in digital assets from David Bird from EY,

Rob Massey from, from Deloitte. You know, Rob Massey's is a

good friend. We work a lot with Deloitte. They're amazing. Through folks who sit on

the FASB council, everything from there, we bring everyone together. We have them

share their ideas, share what's, what's working, what's not.

We do product updates from bitwave and then we also do a lot of thought

leadership about like, you know, when, how are, what kind of adoption are we seeing

in the industry? What are we seeing in terms of payments, in terms of

nfts? Like how are, how's it, how's the state of NFT going? So it's really

this, it's a place for a lot for folks that are interested in how businesses

are using crypto to get together, learn about it, get

some CPE credits. That's a, that's a big bonus. So we got cpes on that

side. Get some CPE credits and

manage the entire lifecycle there. Nice. Nice. And I think you

mentioned it's going to happen in Nashville this year. Yep. Nashville. It's the

day before. It's the Wednesday before Nashville. The BTC

Nashville. So it's going to be, I believe that's the

July 24. Very cool. And

that you started to list a couple of people that might be

involved. Can you highlight any other key sessions or

speakers or topics that you guys are going to have at this year's

edas? Yeah, I mean, so I think, like one of the things I always love,

there's two sessions that I are always fan favorites. The first is

we'll get together some of the CFO leaders from the companies that we work with

and for them to sort of talk about the

state of the art for automation around digital assets. So that

will undoubtedly, we'll have the CFO from

Hedera on there, probably folks from Opensea, you know,

these, the people who are kind of working on the hardest problems, digital assets. We

get them together to just talk about what are they seeing, what's working

for them? How do they run a scale digital asset organization?

Like, you know, because a big part of what we do at bitwave is, it's,

it's not just, you know, I always talk about bitwave

is really funny. Like, if you, if you just want to get your books

closed as fast as possible, you know, it's sort of like if you want

to be more of a retail guy, you know, do this stuff with spreadsheets, use

one of our competitors, like, you know, look at the other folks that are out

there. If you want to do it right, that's where bitwave comes into play. So

for us, like, someone like Hedera is a great example where they are

doing, you know, billions of transactions and they want to

basically handle it correctly. They need to handle it with, you know,

in a way that they can get audited. Uh, because they do get audited

every single year. They need to have incredible high fidelity, incredibly

accurate. So that's where bitwave comes into play. And scaling that is really

hard. So, like, scaling a highly compliant gap,

running a gap house for accounting and scaling that to

billions of transactions is incredibly complicated. So I love the sessions where we get our

customers together who are doing the hardest accounting that's out there, and we get

them to talk about how they're doing it. The second session that I always love,

which is, this is more of a pet of a pet. One of mine that

I love is we always get to get together cpas who are in

outsourced accounting firms. So these would be folks from, like, propeller fuel,

three cypher counts. You know, we get them

together and we talk about what their life is like right now.

Because, you know, outsource accounting is always a hard industry. Like, outsource accounting is

a, is a really, really, really tough industry for folks that are in that space.

I think it could be pretty lucrative, but it is. You know,

folks are always mad at you. You're, you're always under the, you're always under the

gun to get your books closed. You know, your customers are doing stuff that

they don't tell you about. So someone goes and does some, especially in the crypto

world, someone goes and puts something into some crazy defi pool or whatever it

is. You're something like, what the hell is this? Like, how do I deal with

this? And so it's a, it's a very

underappreciated kind of, like part of the industry. And

so we love to get them together. It's one of my favorite things is we

get, we get our, our best partners together, and we let them

just talk about, you know, how are they staying up to date how are they

dealing with their clients? What does business development look like in the web three

space. How is the bear market or the bull market infecting them? All that kind

of stuff. So those are two that I always look forward to. And then we'll

have some great tech talks, probably from. From some of the folks from the l

one s and l two s that we work with, really, really who are pushing

the boundaries of technology here, because that's where we get really excited also is

like, we're all waiting for that day that we start to see mainstream adoption. And,

like, EDAs is a. It is a fundamentally, it is

a conference about people who all want to see

mainstream adoption of digital assets. And so a big part of it really is,

what are the mainstream use cases we're seeing? When are we going to see McDonald's

start to use this? All of that? Yeah.

Cool. I'm excited to check it out.

So what future trends and innovations in on chain finance do you see

as the most impactful for enterprises as a whole?

Well, you know, right now, we are doing a ton of stuff on payments. I

think payments is the absolute. I think that the way that

the majority of people. So we already have, I don't know, let's say, 100

million crypto users. When we go from

100 million to a billion crypto users, it will

be the next billion. Will not

realize they're touching crypto. That's sort of like, it's the way

it always works is like the technology moves in

such a way that, like, the next step has to be that it can't be

someone downloading metamask and signing messages and all this kind of stuff.

It has to be. It has to be through other means, means possible. And

honestly, the number one place that we're starting to see that is, is payments. So

this would be, you know, pay USD, PayPal, stablecoin,

USDC, all the stuff that's happening around there. I personally

think that B two B payments are. Are kind of the first,

uh, bulwark to fall there. And in particular, like, I think

a lot about international remittances. You know, international, when you're doing international

remittances, uh, I as a. As

a kind of crypto native person, I don't think there's a company that I

dislike more than Bill.com. Like, it's one of those companies

that I just cannot stand their business model because I feels,

it feels so exploitive in some ways. Right? Because they do. They.

They take bites on, like, every single side of the apple. They charge you a

licensing fee, they charge you a per transaction

fee. They hold your transactions for an extended period of time. So they are

making a float. They're making a float on it. Uh, if they're going to

forex, if they're going to a foreign currency, they charge you a spread

like this is the most miserable thing in the entire world. It just, it just

annoys me so, so, so much. And so for us, like,

payments are one of these, like, absolutely easy to imagine disruptions of

digital assets, which is where it is instantaneous.

There is no bips, there is

no float that someone is trying to capture, and it's ten times

faster, ten times cheaper, and you can move a billion dollars around the world for

$0.07 on Polygon. I mean, it is just so different. So we're

really doubling down on payments. This year, we've released our enterprise payments

product, which we partnered with Coinbase on, which allows you to make

payments. It has a full, deep integration with your invoicing system. So

whether you're using Netsuite for invoicing, it'll pull in that suite

invoices from Netsuite. It'll work with tools like Kupa to actually do

crypto vendor management. So even, like, when you start thinking about crypto, every,

every one of the processes we do has to start to get rethought. And even

vendor management is one of those things because we're all kind of used to how

achs work where you get like a penny test and you have to approve the

penny test and all that kind of stuff. Crypto is a different world and, and

it's also like highly variated between, variegated between,

you know, really savvy crypto users and really unsavvy crypto

users. So, like, a bunch of the people that our customers are paying are just

using exchanges. So you can't, like, we all think about in the perfect world for

crypto payments, in order to prove that I own a particular

address, you actually need to go and sign a message with that address. That's how

everyone wants. You just want to open up your metamask, sign the message, you're done.

But you can't do that with exchanges, you can't do that with custodians. So we've

had to build tech to actually mimic kind of this, this penny test model

so that we actually can make sure that someone who is maybe not a super

sophisticated crypto user is not going to send

$100 million, like $100,000 into the zero, zero

black hole or something. And that's, I mean, at this point we are doing

millions to tens of millions of dollars a month on our payments platform.

And where we fit into all this is we're not taking bips. There are places

that we will do fee based when it comes to the invoice recognition

side. But for the most part, it's a, you know, it's a per user, per

month plus a module cost, all you can eat, as much as you want to

send around the world. And then what we really do, it's, the hard part, is

kind of like pulling together coupa, Netsuite, you know, pushing the bill payment

piece back up into Netsuite marketing as paid, handling, calculating your forex gain

or loss off of the invoice delta separate from your, from

your accounting or tax gain or loss that's happening off of the disposition

of coins. So there's, you know, bitwave allows you to have two different gain

losses. Both. One gain loss, it's on the asset itself

as you're paying a bill. But then the other gain loss is going to be

the forex gain loss based on the movement of the currency between

when you got the bill and when you actually finally paid it. So lots of

complexity there. We're super excited about it. We expect to see a lot of stuff

happening there, including we'll reach out separately,

but including some stuff around, around subscription payments and all of that,

and some things that hopefully will make that a. I don't know if it's ever

going to be the easiest process in the world, but make it more palatable for

people that are locking up assets because that's where it gets really tricky, is

if you're having to lock up six or twelve months of assets,

it's not always the best thing. We've got some solutions around

there. Very cool. Yeah, I think that

people want it and people expect it when you're web three native to be able

to pay a subscription in crypto. And it's just like there's challenges

like you described, you know, you have to lock up funds as of, as of

right now, you know, with tech the way it currently is. And so, you

know, it feels like you're paying it all upfront when. And you kind

of are, you know, in a way. Yep. So it's like, why not just pay

once? Yeah, exactly. And then I'd be remiss. Also,

I haven't mentioned it, but, you know, one of the other things that we do

a lot of is institutional. So this is working with the large banks, the

large exchanges, folks like that. So, like, Coinbase is a customer of ours and like,

you know, there's, there's a bunch of the different banks out there. And so they

have very, very different challenges than what you would think of as like, the day

to day accounting. And in fact, a lot of the challenges, the biggest changes run

into are not accounting based. They're, you know, SAB 121 is a really

good example of that where that is not an accounting problem. It, it kind of

is because you're supposed to be, you're, you're tracking liabilities of client assets,

but it's really, it's a, it's a big data problem. It's a data integration

problem, and then it's a, it's a problem of how are you actually tracking these

assets and reporting out to these compliantly. So one of the things that we launched,

we launched this the month after FTX. We

got our brain, our advisors and the brain trust together and we put together

a product offering that's really focused on, like, if you are an

exchange and you don't want to be FTX. And I always

joke about this because, like, Amy, my co founder, has literally, I mean, she

tried to sell FTX for years. Like, since FTX started.

Every, you know, month she, she sent spftx.com an

email and he replied to a lot of them. Like, there was a lot of

like, emails back and forth between them. Uh, and we, you know, we

had some shared investors and things like that that we were talking about, but every

time we tried to sell them, he's like, no, we're good. And like,

well, yeah, I mean, I guess that makes sense. Like, maybe we should have

shorted that stock. Maybe that's, maybe that's one way to look at the world. So

we, so we sort of got the brain trust again. Well, well, if, if

an exchange actually didn't want to go the FTX route and actually

wanted to be good, like, what's the set of tools that they would need? And

so that was bitwave. Institutional is an entire set of like really complex

reconciliation tools. You could kind of think of like black line in terms of that.

Reconciliation tools, uh, uh, data tools for getting

data, saab 121 reporting tools. So, like the ability to track client

by client assets. All that, all that in one place. And then the 1099 stuff

that's happening this year, which is, uh, tracking client assets and then actually doing

gain loss reporting on that to do 1099s for them. So we have a whole

institutional product that we work with the big boys in the space

on. So you mean, you mean Quickbooks isn't. Enough for

jeff hundred 5150 Quickbooks instances? Which, like, you

know, you say that and you're like, just, I mean, you're just like, what the

hell? Like, I can't even imagine that. I mean, that would be so

miserable. Even from purely, even if you were

trying to do it, like, even if you're not trying to do it right, that's

still miserable. That's so much extra work. Just do one Netsuite instance and lie to

your Netsuite instance. Don't lie to 150 different Quickbooks instances.

Insanity. Insanity. Yeah. So as

far as the future of bitwave and just digital asset accounting in general,

what's next for bitwave in terms of product development? Like, what are you guys working

on? What are you excited about? It sounds like payments is one of those things

we've highlighted. I'm sure of a lot of things, but any partnerships

or product, new product development in the works, we, we've got. Some

really exciting partnerships coming. I can't talk about them yet, but they'll be, they'll be

dropping over the next, the next few months here. Very, very exciting stuff.

All, like, right now, this month, I think we're, this year, we're really, this is

going to be a payments heavy year. I mean, it's just as the nature of

the stuff is, that is the payments are so if anyone is looking to do

ar, AP, you know, we have a full module for both AR and AP that

allows automatic invoice matching, automatic bill pay matching. Like, a

lot of the, the future of this stuff continues to be more and more automation.

So for us, like, the first generation, we, you know, again, we invented this

stuff. The first day we did this, it was all manual,

and it was, it was just getting over that hump of like, can we even

do this? And then, and then it's slowly been more and more about

automation. And now we're getting to the point that where we are today is that

more and more of our customers are saying, like, hey, I want to get a,

you know, with one of your competitors, you got, we're running

a 20 day close process. Can you guys get us to a three day close

process? And that's where most of our big clients are. Is that a three day

close process? So, like, that's where we are looking there is like, how do you

add, you know, continuous closes, continuous checks, continuous balance checks,

all the stuff you need to be doing. Let's move that from a discrete, closed

process that takes a bunch of time into continuously running processes.

Let's get everything. Every single thing that you can do in bitwave should be automatable.

Uh, and, uh, and that's, that is probably the biggest set of things that we're

kind of doing. And that's, that gets into the payments of too, because like, you

want to be able to go in. We did, it's actually, we did this really

interesting study, uh, where we looked at the number of clicks it takes to pay

an ach bill in, uh, in Netsuite versus how many it takes to

pay a crypto bill with bitwave. And we were able

to get down to be basically half the number of clicks as, as

Netsuite. So this is just a great place because crypto should be

better, we should be able to automate this stuff better, we should be able to

do all these things better. And we're

finally at the point where we're actually getting to do that kind of automation work,

which is super fun. It's programmable money, right? It's programmable

money. And then scale, I mean, just scale continues to be the hardest part about

this. So, you know, we continue to work hard on, like, how can we run

reports? I think right now we run reports for

100 million transactions in like a minute that just, but even that like,

feels slow for people using it. So it's like, how do you, how do you,

how do you get those reports better? How do you just increase the scale of

your system? All of that? Cool. Um,

so what advice do you have for finance professionals

that are looking to navigate the digital asset space? Um,

you know, there's a bunch of advice out there to, there's sort of like generalized

advice and, you know, I'll let you do that. Like, go to bitwave. Bitwave u.

So this is at university, bitwave IO, where we have a entire

certification course for folks who are looking to learn this stuff. Uh, you know, crypto

CFO is obviously a great, great resource as well. But, you know, the

number one thing that I see, the number one difference that I see

between people that get it and people that don't get it, uh,

comes down to whether they themselves are using

crypto. It honestly always comes down to this, is

that the, you as a

bookkeeper, you need to play around with this stuff. Like, every

firm that's out there, we always say this, and I don't think any of the

firms do it yet, but maybe a couple of them do. You know, every,

every firm that's out there should be taking a couple hundred dollars

a month and giving it as crypto to their folks to go and play with

the newest up, play with l two s, play with zks, play with, like, play

with defi pools. Like, if you're not doing this, you don't understand.

It's really, really hard. Even with bitwave explaining it, it is

really hard to understand what a deposit into a liquidity

pool is if you havent done it. And if you havent, you dont know what

a liquidity pool is if you havent gone and traded one of these because theyre

such foreign concepts. The idea of a liquidity pool is so

separate from anything that anyone has ever seen

in the trading space that if you dont go and play around with it, you

will have no idea what you are accounting for. So that's my biggest bit of

advice, besides go to university, bitwave IO, and, and do

our certifications and stuff like that. My biggest, biggest piece of advice is

you gotta play with this stuff. And if you can get your boss to pay

for it, that's even better, right? Yeah, yeah, yeah. That's what we, we

created the tripper on the crypto verse course around that. I eat that idea

that, you know, with $25 on Polygon, you can mess. Around

with, you know, anything, anything in the entire world,

right? You got about 2025, you know, maybe

250,000 transactions you can do there and probably more, you know,

lots of, lots of transactions. Right. And smart contracts and all that

stuff. So, yeah, it's, it's when you have

these l two s with super low fees, you can go and mess around and

deposit liquidity on a liquidity pool. Do some swaps on a dex, you

can, you know, leverage lending and borrowing protocols

and see what borrow box pay. Yeah, borrow a buck, pay it back.

Like, just play around and sort of see what's actually going on, because that's the

only way you're going to understand how these things all work. Yeah, yeah,

completely. And so how do you envision the role of digital assets

evolving within enterprise finance over the next few years? And this

is my last question. And then we'll just close things up after this. Yeah. You

know, Deloitte talks about this, too, that I, that Deloitte says that they don't have

a single Fortune 500 company that's not looking at digital assets right now. And I

think that that's, that's incredibly pressure. I mean, if nothing else, I think we'll

start to see payments move to digital assets, uh, for the pure remittance

piece of it. Uh, just as a. As a cost saving. Like, you know, if

you're moving a billion dollars around and you can save ten dips on that, that's

real money. So I think that we're going to start to see the payments, whether

or not the crypto companies realize it or not. And so, I'm sorry, the Fortune

500 companies realize it or not, we're going to start to see that, that really

start to change. Um, I think it's inevitable we start to see real supply chain

stuff. It. One of the things that kind of kills me about the industry is

that I feel like IBM set, set. IBM has set so many different

industries back like five or ten years that it's hard to even, like, talk about,

you know, IBM, I swear to God, set AI back five years.

Because when they came up with Watson and it was like, completely

underwhelming. It was a consulting project. Like, it didn't do anything at

all. It literally made people that much more skeptical as LLM

started to come and all these other things started to happen, and the same thing

happened when they did. So IBM had the big deal with Maersk,

where they did the big supply chain deal with Maersk, but

instead of being smart about it, they built it on

Hyperledger, which is a totally permissioned blockchain. And the problem is

that if you have a third party building a

supply chain management tool, it doesn't matter if you build it on a

totally private blockchain or a database, doesn't matter. Like,

the day that you are totally private, you've. You've given up all the benefits of

blockchain. Like, that's just, it just doesn't make any sense. So we're finally starting

to see people, like, climb out of that hole and look at how to do

supply chain on public ledgers. Because the trick for supply

chain, it's never going to be about tracking the assets. Like, tracking

the assets is good. That's a, that's an important part of it. But where

blockchain revolutionizes supply chain is when you combine

the tracking of assets with the release of funds. And that only happens on,

on public networks. Like, it only happens that, like, you know, a

pallet comes into a Walmart, you scan it, and then

that releases funds from Walmart to the shipper, to the. To the

longshoremen, to the Vietnam. The factory in Vietnam that made the screws.

Like, this idea of actually being able to do programmable release of funds across supply

chains is incredibly powerful. And, like, that was not what

they, you know, when, when IBM did the Merris deal. All they were trying to

do was track, yeah, where's a shipping container? And that's not, that's not the hardest

problem that we all deal with. We got, we got big databases for that. And

so that's the part we're finally starting to see. People get serious about supply

chain as it relates to actually release of funds and, and

real money moving around, because that's where we're going to see really, really cool stuff.

So, and even that, I know, I, like, I'm a broken record. Even that's a

payments problem. Like, you know, even that is a, is a fundamental

payments problem of how do you, how do you, how do you release payment for

something without having, like, you think about Walmart's AP team. I mean, it

must be a thousand person team that manages the entire life cycle

of paying bills and all that kind of stuff. And so how do you, if

you can actually get them to cut that team by three quarters

again and cut their bips on what they're paying, that's real money.

So that's where we, that's the stuff I get excited about.

My dad, he used to own a business. He just, he just retired, but he,

he, his business was always pay when paid. So he would get paid after the

sub subcontractor that he was contracted by. It's brutal for small

businesses, but, you. Know, he would get pissed off because they would, they would

try to, they would try to use their terms or they wouldn't pay him till,

you know, 90 days after they got paid. And it's like if you could have

it so that it was programmed into that original payment, that the other people

down the stream would get paid. You know, makes things easier for everyone.

And, you know, it's more transparent, right? And that's more transparent.

It's just clean. It's just cleaner. I mean, it's just one of those things. Like,

it's just cleaner across the entire board. And it helps everybody. It makes

the, and then the accounting is easier. Like, you do that with something like bitwave.

Like you would, bitwave would be set up to automatically recognize all those, all the

revenues, the liabilities that, the payments that go out on the other side of it.

So you would have one, you would see this transaction where you got paid and

then immediately release payments, and both of those would get booked to your journal automatically.

I mean, it's, it's really, really cool stuff that can save a lot of time.

Uh, but we just got, we got to kind of get there. We got, we

got to get it so that your dad know what kind of business he's in,

but, like, we got it so that your dad could have actually taken advantage of

it, which we're nowhere. We're nowhere near where I can always think about my

dad. We are nowhere near where my dad. Could take advantage of that

environmental drilling. So, like. Like. No, yeah, that's probably.

Probably not too much. Although, actually, the drilling stuff is, like, a lot of the

oil stuff, too, is another great use case for the crypto. Like, so. Yeah.

Yeah. So, um, any final thoughts or key messages

you'd like to share with our listener listeners, especially those interested in the

intersection of tax, accounting and digital assets? Well, check out

bitwig IO. Check out edas. Edas

live. We'd love to have everybody here. It's gonna be a really, really, really

fun show. Thought leaders from across the industry, people looking forward, people

looking backwards. Talk about Fasb, all the. All the stuff you, you know and

love, and then. Yeah, no, that's it. Thanks so much for

having me. Yeah, it was a pleasure, and we're really glad to

have you on, and thank you again for coming. Awesome. All right,

thanks, everybody.