In 2019, Armanino debuted TrustExplorer, an assurance platform that uses blockchain technology to provide continuous evidence collection and on-demand audit opinions. The firm has announced a new client in CoinShares, a European digital asset investment firm that has more than $1 billion under management.
TrustExplorer works by interacting with digital assets — i.e., cryptocurrency tokens — on the blockchain and attesting those assets in real time. Because cryptocurrencies can be volatile investments and are a relatively new category or asset, attestation is particularly important both for investors and regulators. Through TrustExplorer, investors can access attest reports on demand for CoinShares’ crypto asset exchange-traded products (ETPs) that are updated every 30 minutes.
“There is an emerging alternative financial system represented by cryptocurrency that will continue to grow,” said Noah Buxton, leader of Armanino’s Cryptocurrency & Digital Assets practice. “Everything that is in your wallet today will soon be a natively digital dollar. The investments that you make will be digital assets in the future. For us it would be crazy if we weren’t getting involved in that. One of the strategic anchors at Armanino is innovation, so we try to really live it.”
Public and open visibility into reserves, combined with on-demand attest reporting, creates a new standard of trust for the crypto and digital asset industry. Firms like Armanino get to shape what these standards are, by being one of the first to provide the possibility of such visibility. TrustExplorer can be used by investment firms to demonstrate point-in-time reserve ratios to their customers, banking and insurance partners, regulators and prospective institutional partners under American Institute of CPAs' standards.
Regulators worldwide have been slow to catch up to cryptocurrency’s pace of growth. In the U.S., the IRS is just beginning to require taxpayers report crypto investments. In Europe, laws around cryptocurrency investments vary by country. Buxton explains that investors and regulators have been relying on yearly audit and compliance filings to support due diligence efforts. Because it attests in real time, TrustExplorer can bring an assurance window down to less than a minute, Buxton said.
CoinShares, being such a large digital investment firm, has great interest in transparency to both investors and regulators, especially as that transparency will provide legitimacy to the digital asset class overall. Before using TrustExplorer, the company published a daily snapshot — a mini balance sheet, if you will — of all its digital assets and the obligations arising from the notes in issue.
“This was just a quick and easy way to show that the assets are in excess of that liability, but fundamentally, that still represented data we were providing ourselves,” said Richard Nash, CFO of CoinShares. “The numbers give comfort, but how much does it really mean when no one outside the organization is checking it? With that in mind, we wanted a solution that would involve third party verification to effectively use as a way to show off internal controls, and ultimately prove we are robust, transparent, and holding the assets we say we’re holding.”
To learn more about TrustExplorer please visit:
View the CoinShares attest report page here:
