August 31, 2021 |James Messi
The Big Four account firms continue to expand in the field of blockchain and cryptocurrency as they sign up for new roles in both sectors as auditors. Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and Klynveld Peat Marwick Goerdeler (KPMG) are in the process of providing their services to new sectors currently making their names in the world of crypto. The patronage that the cryptocurrency and blockchain receive brought about new challenges, offering an opportunity for the Big Four firms.
Blockchain technology is starting to firmly establish itself after becoming popular by Satoshi Nakamoto’s whitepaper for Bitcoin. More established organizations are starting to recognize the technology, giving it more credit.
Now, the Big Four are starting to help blockchain and cryptocurrency companie take on new challenges. These include regulatory hurldles, interoperability issues, consensus models, and the technology’s development itself. With these problems being managed, the Big Four firms are seen to play an important role in enticing more mainstream adoption to the cryptocurrency ecosystem.
The Role of the “Big Four” in Crypto
As the Big Four firms take special interest in cryptocurrency, it is important to consider the role they actually play here. These firms are responsible for the valuation methodology and proof of control in both physical and digital assets. They also do independent verification of financial records against public blockchain data. This provides some kind of assurance to users that the blockchain has transparency and it meets the standards of the industry and any jurisdictions it operates in.
To further improve its service, KPMG’s United States blockchain audit leader, Eric Braun highlighted the importance of developing a blockchain system with the goal of achieving its operational and accounting requirements. Improved blockchain technology would provide support for the entity’s internal authority over financial reports. An auditable technology, Braud added, was beneficial as it increases efficiency and decreases costs.
In 2018, as Big Four firms continued their expansion into the blockchain sector, the firms collectively brought in over $148 billion in revenue after handling more than 50% of audits for both public and private companies.
Speaking of expansion, the Big Four accounting firms are also building blockchain systems. This came after a remarkable increase in revenue from ventures involving blockchain.
KPMG currently provides a number of blockchain-based software solutions.The company’s first blockchain related initiatives involved providing blockchain strategies, onboarding of participants, and governance and operating models. One major project for KPMG was its service provision in the creation of blockchain solutions for the telecom industry. This was completed for companies such as Microsoft, Tomia, and R3 in their preparation for 5G networks.
KPMG has also taken interest in bringing blockchain-based use cases in other technologies like internet of things (IoT), artificial intelligence (AI) and machine learning. The firm recently received a U.S. patent for a blockchain developed with AI data management procedures. This was considered a vital development as it showed the importance of blockchain and AI’s convergence in enabling trusted artificial intelligence.
Meanwhile, Ernst & Young (EY) is working with Microsoft and ConsenSys to develope an open-source blockchain project that they’re calling Baseline Protocol. This project runs on the public Ethereum mainnet.
Paul Brody, EY’s global blockchain leader, said the project was introduced in their bid to solve issues with enterprises using public blockchain networks. With Baseline Protocols, enterprises can collaborate over the Ethereum network.
Accenture, a Fortune Global 500 company, on the other hand, places its focus in utilizing blockchain technology to operate a digital identity, supply chain management, and financial infrastructure. It recently worked with Fujitsu in making an open-source software development kit to aid blockchain interoperability issues. Accenture currently has 160 blockchain patents as it works for another joint project. The firm has continuously tried improving its service, providing its clients with choices in the platforms they can connect to.
Meanwhile, it can be recalled that in 2017, accounting firm PricewaterhouseCoopers tried to accept bitcoin as a form of payment for its advisory services. This was the firm’s first move in the virtual currency space where they could receive the bitcoin asset and convert BTC to USD. The decision came after consideration of the firm to embrace new technology and incorporate business models in its services.
The Big Four Firms: Sharing the Findings
The reports coming out from the Big Four accounting firms in their expansion into the blockchain and cryptocurrency industries serve as an open source of information for anyone who might have an interest in both sectors.
PwC published its 2020 Crypto Hedge Fund report highlighting the increase in total assets under management of crypto hedge funds globally, as well as, the best approaches used in the crypto hedge fund sector.
Deloitte together with the World Economic Forum (WEF), published its findings on the interoperability of existing blockchain protocols. They noted blockchain technology will work better if all specific industry ecosystems are linked together under one framework. Prominent blockchains like Polkadot (DOT) are effectively tackling this with solutions to connect all blockchains.
Meanwhile, Accenture and the WEF conducted a study that revealed blockchain expansion was more focused on the technology, rather than identifying and pursuing business possibilities related to it.
What Next for the Big Four in Crypto?
The Big Four Firms are taking quite an interest in blockchain and cryptocurrency. Aside from their auditing service provisions, the firms are also working to build blockchain systems and provide blockchain consulting in their services.
PwC Asia-Pacific chairman Raymund Chao stated that it was in the interest of embracing new technology and incorporating innovative business models in their service. The business world should prepare for the arising business revolution courtesy of the blockchain and cryptocurrency, the CEO of EY Switzerland noted.