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Have you bought crypto or are you wondering what it’s all about? Baker Tilly Staples Rodway Christchurch cryptocurrency specialist Matt Shallcrass was recently interviewed by Julia Malley, from crypto and bitcoin trading platform Dasset. Below, we’ve summarised what he had to say about the volatile but fascinating “crypto space”.
Time to read: 6 mins
It’s a difficult time for investors, says Matt. We’re in the middle of a bear market, meaning cryptocurrency has fallen more than 80% from the 52-week high.
He’s an accountant of 19 years, and these days most of his clients are crypto investors. Over the past four to five years, Baker Tilly Staples Rodway has been building its cryptocurrency specialty services, and he believes it to be one of the most capable firms across the country with regards to crypto tax. He and his fellow specialists have seen it all. They’ve acted for large Ethereum whales, Non-Fungible Token artists, traders, HODlers (Hold On for Dear Life) and more.
“We’ve also, unfortunately, seen a number of clients fall victim to various scams over the years (and) we’ve dealt with a few clients that have unfortunately passed and are trying to recover their crypto holdings as part of their estate process and planning,” says Matt.
“The thing I like about crypto is that there's always more to learn. There's a lot of uncertainty – it's obviously highly speculative – but volatility is the price of admission and once you've gone into the crypto space, it’s very hard to get back out of that rabbit hole.”
Matt works at our Christchurch office and one of his colleagues is Taxation Services senior manager Mike McDrury, who has made several crypto binding rulings (IRD’s interpretation of how tax laws apply to specific circumstances) to Inland Revenue. This has given clients certainty as to how their crypto holdings are treated for income tax.
Matt says it’s been a good mechanism for getting some certainty from Inland Revenue because crypto is relatively new. Regulators are taking time to get up to speed and the tax laws don't always reflect the reality of what’s happening on the ground.
“I’m a born and bred accountant, which I have been doing for more than 52% of my life," he says. "My motivation is really helping people. I work for clients, not the IRD… but we want to operate within the confines of the rules so that we’re not getting unnecessary attention. IRD has dished out a whole lot of funds as part of (the government’s) covid response and crypto’s a space that the IRD can see as a way of getting some easy revenue gains. My role is really just making sure that people are compliant but we're doing it in a practical and personal way.”
Among the more volatile aspects of crypto, there are gems and genuine projects. Matt’s ridden that wave. He understands the language, and how the market moves, and is an investor himself – something that resonates with the relatively small community of crypto investors across New Zealand.
Matt’s own children are set to reap any rewards of a bright crypto future. He’s invested in a couple of Ethereum for each of them because he couldn’t bear to see them earn a meagre 0.25% interest from bank account savings. He hopes that the Ethereum will be worth something rather more substantial when the kids are old enough to buy a house.
As for his wife, a crypto sceptic but with an uncanny knack of picking market tops, he hopes to one day wake up and say to her, “look, this whole thing that you said is a scam has made us millionaires”.
There are currently more than 20,000 cryptocurrencies in circulation. When Matt did his first presentation a year ago, there were just over 10,000.
He doesn’t hedge his words: Most are “garbage”, he says. He compares crypto to the early internet of the 1990s in that it’s new technology and people are still working out how it integrates with the traditional banking system. Only the strongest cryptocurrencies will survive and specialists like him need to carefully work through which have genuine utility and value, and not get swept up by the allure of wild gains.
One that concerned him earlier this month was Quant, which rocketed up in price for three days before settling again.
“I haven’t done a lot of research around the coin myself, but if you look at what was in the Top 10 this time a year ago, Polkadot was up at about US$50, Solana was at about US$200 or $300, and those projects really have faded into obscurity. A lot of that price action was speculative, rather than based on genuine development or building. You’ve got to know what you hold and genuinely believe in it.”
He says while crypto is very much the wild west, some have real promise and it will be interesting to see what the space looks like in the next few years because it’s still in its infancy. Current crypto adoption is akin to the earliest days of major technological breakthroughs such as cellphones and air travel.
“I think crypto and adoption is only going to increase and accelerate. We’re still at the cutting edge of these things and I think we get caught up with looking at daily and weekly charts. The reality is, 99% of the world doesn’t really know what crypto is and how it operates. We’re still very early, so (if you have crypto) you’re part of an elite group of people that hopefully, one day, will reap the benefits.”
Next week we’ll summarise more of Matt’s interview – or if you want to watch it in full on YouTube, click here. Matt will also be a presenter at a Thursday, 01 December webinar on “Understanding the Basics of Cryptocurrencies for New Accountants and Lawyers New to Crypto 2022”. Click here to register.
Alternatively, click here to read our Cryptocurrency Frequently Asked Questions.
DISCLAIMER No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.
"Cashing out in crypto is something that I and many others dream about yet dread (due to) the tax implications. Matthew Shallcrass was excellent, first of all by having a personal interest in Cryptocurrency he knew exactly what I was talking about. He clearly explained the current tax laws and gave options around how I could cash out. The process was smooth, communication was great and service was prompt. Couldn't have asked for more. I will continue to work with Matthew and highly recommend him to anyone in my situation."
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