How do you become a Cryptocurrency auditor?
When cryptocurrencies initially became popular, the digital asset sector and traditional regulators clashed about who had what rights and duties in the new market. Today, there is a stronger compromise between both parties, as both realize the technology’s economic benefits as well as its enormous potential for increased openness.
The transparency of cryptocurrencies and blockchain is beneficial to both regulators and businesses since it streamlines and enhances the auditing process for businesses while also providing a permanent record of all transactions (which is ideal for auditors and regulators seeking to verify the actions of these enterprises.)
While auditors and government agencies may access all transactional data from a blockchain-based system in practice, they frequently need more information to conduct a full audit, particularly where the nature of transactions is a problem. To minimize risk, more information is required than just a record of transactions.
Auditing of crypto transactions in more depth
Cryptocurrency has become a widely accepted asset, and companies use it regularly. However, because this is a newer type of money, it comes with its own set of difficulties — both in terms of reputation and financial viability — therefore regulation is required to guarantee that activities are lawful and consumer protection rights are respected.
A blockchain transaction record offers unambiguous proof of the transaction’s existence, but that is only one component of an audit. An auditor must also confirm the identities of all persons involved in the transaction, the ownership of the private keys in question, and the legality of the blockchain transactions.
Why cryptocurrency auditor is in demand?
Typically, auditors and government organizations use the information received from banks to check their clients’ accounts and balances. Records of public blockchain transactions and balances may now be viewed instantly using a blockchain explorer in the decentralized era, reducing unneeded intermediaries and related expenses. While this is a step forward in certain respects, it also presents new problems for auditors.
Many auditors, for example, are required to establish cash ownership or the validity of a bank balance. An entity can show the auditor a transfer from its wallet to establish ownership of private keys. However, because every transaction on the blockchain incurs costs, this is an inefficient and costly approach to verify ownership. Due to the pseudonymous nature of bitcoin and other prominent cryptocurrencies, auditors may have difficulty determining who the entity is.
The Big 4’s Market Adoption
If you need proof that blockchain can enhance the auditing process, look no farther than the Big 4 auditing companies — Deloitte, PwC, EY, and KPMG — who are all developing internal tools and purchasing crypto businesses to position themselves for success in the crypto regulatory arena. Cryptocurrency exchanges and digital asset funds are now among their clients, posing additional due diligence and auditing issues.
The Quadriga exchange case from early 2019 provides a current illustration of this. The primary problem of missing funds (previously held by Quadriga) exemplifies the challenges authorities face when it comes to blockchain audits. Despite the widow of the Quadriga exchange’s founder claiming that the cash was in cold wallets, EY and many other parties were unable to find the wallets containing the stolen assets.
Such wallet addresses may be clustered and linked to real-world firms using blockchain analytical tools, which might give better insight into transactional activities.
Wrapping up
With the changing world curated with blockchains and cryptocurrencies, the demand for cryptocurrency expert advisor is high. Getting cryptocurrency advisory certification is a must since you will not only understand the depth of the topic but will also get an edge in the market since you will be a certified crypto auditor.