Ask the expert: Blockchain
Featuring Amy Park, Audit & Assurance Partner, Deloitte & Touche LLPA new age of digital assets
Q Are corporations going to adopt digital asset strategies?
A Corporations are seeking digital asset strategy discussions to understand if — and when — a strategy is right for them to execute. In Deloitte’s 2021 Global Blockchain Survey, 80% of respondents agreed that their industry will see new revenue streams from blockchain, digital assets, and/or cryptocurrency solutions. This trend is evident as digital assets have entered more mainstream adoption. Successful adoption of a digital asset strategy includes collaboration throughout the company (e.g., operations, legal, finance) and with external stakeholders (e.g., vendors, advisors, auditors).
Q How do you approach accounting and reporting for digital assets?
A For some, there may be challenges when applying accounting standards that were issued before blockchain-enabled transactions existed. The application of current — or future — accounting and reporting guidance requires a thorough understanding of the facts and circumstances surrounding the flow of transactions involving digital assets. Nonauthoritative practice aids have provided some clarity, but companies often seek blockchain-savvy accountants to help understand relevant information and evaluate the accounting. Companies are also focusing on disclosures, including additional disclosures, to provide relevant information to investors when the accounting may not reflect the economics of the digital assets.
Q How should companies address the evolving trends of cyber risks within the blockchain ecosystem?
A Tech-savvy companies are starting to expand their initial use of digital assets into new forms of digital assets (e.g., digital tokenization) and transactions (e.g., decentralized finance) supported by complex networks of interdependent smart contracts on public blockchains. These added layers have been the target of highly sophisticated cyberattacks through account takeovers, exploitation of smart contract design flaws, manipulation with flash loans, fraudulent liquidity pools, and technology vulnerabilities. In Deloitte’s 2021 Global Blockchain Survey, 71% of respondents reported that cybersecurity is the biggest obstacle to the acceptance and use of digital assets globally. Companies must consider how their internal controls are sufficient to address and monitor risks that may be outside the organization. Therefore, companies should deploy robust cybersecurity assessments and monitoring controls in response to current and future cyber risks.
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