The best way to do the bookkeeping for Cryptocurrency is to record every transaction related to Cryptocurrency. This will look like a very long process, but it will reduce our time while reporting.
Record Cryptocurrency: Debit your cash account if you are selling it for currency. Create a new crypto account and debit it if you are selling it for another form of digital asset. Credit your cash account and debit crypto-asset account if you are buying it. While resale of Crypto, remove the asset from your books by crediting the asset account. The differences should be coded to Capital Gain or Loss to match the balance.
Accounting Cryptocurrency: It is in digital form of money. There is no physical substance. So, it will be recorded as Intangible Asset.
Cryptocurrency in Balancesheet: It is an asset for the company even though it comes with difficulties. So, Accounting Principles should still applicable for Crypto. Crypto will be added to the balance sheet as an Asset with the value as on the purchase date.
Types of Cryptocurrencies: There are nine types of cryptocurrencies. They are Utility, Exchange, Payment, Security, Stablecoins, DeFi Tokens, NFTs, and asset-backed tokens.
Tax for Crypto: Crypto is an asset so the digital asset is taxed as same as other assets you own. Internal Revenue Service allows to offset gains with the losses in Crypto.
Non-Taxable Events of Cryptocurrency: Buying crypto with fiat currency, Gift or donation of crypto, and Transferring like-for-like crypto assets exchange.
