Balaji Srinivasan, founder of Network School, wrote of Parag Khanna’s work: “Millions of people will soon vote with their feet to reveal the most desirable locales of the 21st century. They’ll abandon failing models and, with a new flexibility created by technology, bring their skills to places that reward ingenuity.”

The migration is underway and there’s a tax problem nobody knows how to solve

Many Westerners experience digital nomad life, but now network state inspired startup societies and popups are giving them longer term ideas - they can stay a month, a year, or longer in one offshore community, in a developing country where the cost of living is lower, they can work remotely, learn new skills and have fun, while building new businesses with emerging technologies and access to capital.

A startup society lets a digital nomad stop being a tourist and opt into a new life, and the number doing it is growing.

Nomads are rarely concerned with the tax systems of countries they’re passing through. Settling in one place can change your tax residency - which works differently to immigration status - and poor planning or non-compliance can be very costly and limit your visa.

Personal tax relocation planning is not offered in most accounting firms, and cross-border individual tax is genuinely complex - more so when someone is moving and earning across multiple jurisdictions and platforms, pooling resources in community structures, and participating in crypto-economies that the designers of existing bilateral tax treaties did not contemplate.

So many are either ignoring it, navigating it by themselves, guessing with AI, or being marketed to by non-professional providers that may contract in CPAs for advice and legitimacy. Without licensed representation and protections against tax authorities, or a carefully tailored plan, the freedom they came for can unravel.

The problem I am working on at Network School

That is the problem I am working on at Network School. But not by building a proprietary tech platform or service that recruits professionals to make it work. We need qualified accountants as technologists building the infrastructure the profession itself should own to serve this new type of migrant.

I have been with Network School since the founding cohort in September 2024, one of 128 selected from thousands of applications.

I am here because I believe network states are the future, and my own global networks and experience can bring the dark talent of the accounting profession.

The practitioners we need are those who understand or want to learn Bitcoin, cross-border tax, entrepreneurship and free markets. Accountants are hard coded to build with systemic integrity - if they build the systems they can confidently take risks to stand up for people the existing system wasn't designed for.

We need practitioners like me guiding people through a tax journey that existing frameworks have no clear map for, toward recognition of a new kind of state that's not defined by contiguous land, but by a distributed, digital-first population.

That is what I am here to do, not to run a nomad tax service that attempts in some futile way to commoditise international tax exits with fixed-price tax packages.

The gap I see in the network state framework

The network state framework, as Balaji Srinivasan defines it here, is crypto-native with network state infrastructure on a blockchain for citizen records, real estate, and key management. What it does not address is who can make it recognised by the jurisdictions that give its members passports. There appears no plan for tax or engagement with aligned professionals who speak their language. That is the gap.

His concept of geodesic over geographic distance shows why. Existing tax systems assume that where a person physically is determines their economic relationships. The residence tests, source rules, and permanent establishment thresholds assume a geographical base. Geodesic distance doesn’t come into it. People in these cloud communities are economically and socially present across multiple jurisdictions simultaneously, organised by their network proximity rather than by where they sleep.

That tax gap is now a pressing reality for the people living inside these communities, not a problem to deal with down the track.

Failing to address this now is how network societies stay permanent tourist camps instead of becoming states.

The compliance concern

Network societies are in the early stages, at V1 and early V2, today. Members are fully exposed to ordinary domestic tax laws in their host and home jurisdictions. The economic behaviours that develop in network societies - income earned across multiple jurisdictions, contributions to society-as-a-service, participation in crypto-native and tokenised economies - sit awkwardly with tax codes and bilateral treaties designed for a different era.

There is genuine uncertainty about how current laws and tax authority interpretations (ruling etc) apply, and compliance risks are giving people significant anxiety. When worked through, the tax rules outcomes are often inequitable given the facts of how these people actually live and work.

This is why credentialed public accountants with diverse cross-border expertise and peer-training need to be present in these communities now, representing people against interpretations of domestic laws while programming the systems that can demonstrate collective good faith.

Getting that good faith on record now is what later negotiations for diplomatic recognition and carve-out tax treatment, amnesties etc, will depend on.

Where this leads

In 2012, writing an international tax masters paper, I proposed a tax system for global citizens: report and contribute once to a global body, distributing funds to countries based on each person’s physical footprint during the period.

The idea was to end separate filing in each jurisdiction, to remove atomised compliance across multiple systems for one life lived across borders. That was before I studied blockchain and read The Network State and knew what I needed to build. Living in Balaji’s experiment has exposed the tax frictions of people aggregating across borders at scale, so I’m revisiting that work.

The endpoint I am working toward is the recognition of a non-geographic resident class whose tax affairs, for defined income categories, are mediated collectively through the network-society entity by status agreement with host jurisdictions. That agreement does not require new international law. It can take the form of a domestic administrative arrangement, a reporting safe harbour with transitional relief, or a delegated withholding framework negotiated with a willing host sovereign.

I first publicly shared this argument in September 2025, ahead of the Network State Conference: LinkedIn

The tax development path looks like this:

• V1 Members file their own taxes individually in each country they live in

• V2 Patterns emerge across the community - similar situations, similar obligations - and practitioners start coordinating responses

• V3 The community builds its own professional and institutional layer - credentialed practitioners, compliance systems, shared records

• V4 The community’s economic weight becomes visible to host governments and negotiation for preferential treatment begins

• V5 The network society negotiates collectively with host jurisdictions - not through a single institution but through a credentialed professional network representing members, individually and collectively

• Beyond V5 Network residency becomes a recognised legal status - a new tax base and class of taxpayer that existing tax systems are incentivised to attract

Network societies like Network School are at V1 and early V2 stages now. The work of moving to later stages is the present task, and it should involve profession-led innovation from the start - not retrofitted later when the frameworks have already been set by others.

Why this cannot be left to non-professionals

I’ve been observing people inside the network state movement trying to solve the tax problem without calling directly on the expertise it requires. That is understandable - they're confronted by compliance fears and want to do something to be in control (enough people are afraid of tax to pay for a half baked solution on a stick).

But no one is asking whether qualified people within their geodesic proximity are already working on it, and whether a practitioner-led solution would serve members better than a platform built by non-practitioners that contracts CPAs in for legitimacy.

That model puts the CPA professional in a supporting role inside someone else’s product. It does not give network society members the licensed representation and structural protections they should be able to rely on. Nor does it give the profession the early standing it needs to negotiate on their behalf at V4 and V5.

A network society that reaches the point of negotiating carve-out tax treatment with host sovereigns needs a constituent capable of representing each of its individual members individually and collectively, with the same rigour that any other organised economic actor brings to fiscal negotiation.

Any tax solution that can land people in jail needs to have experienced professionals leading it from the start. Tax authorities recognise licensed tax practitioners who are members of self-regulated accounting bodies and are more likely to trust their software outputs. Even if you’re audited, having your own adviser defend a reasoned position means the difference between forgiveness or penalty and a prosecution. Roger Ver didn't listen to his tax adviser.

A community membership model, not a procurement model

Professionals contracted downstream for technical support have no stake in the community they are representing.

You cannot procure advocacy.

A practitioner who lives inside the network society, who has gone through the same tax residency complications as every other member, who has skin in the same compliance risks and the same long-term outcome. That person advocates from lived experience and genuine interest.

They are a member first and a professional second. That is what makes their representation credible to both the community and eventually to the host jurisdictions the community needs to negotiate with as it gains economic leverage.

The professional input issue is being treated as a product problem: Build a proprietary platform, contract some CPAs, solve the compliance issue and tell everyone to use it.

That just treats professionals as vendors, not as members. Vendors leave when the contract ends. They don’t show up at V4 because they were never part of V1 through V3.

The monetary architecture underneath

A collective fiscal counterparty negotiating with host nations on behalf of its members needs a unit of account that no sovereign controls. Without that, the network society is negotiating its members’ tax affairs in the currency of the jurisdiction it is trying to gain independence from. It is paying its collective obligations in dollars, ringgit, or euros - denominated, measured, and ultimately controlled by the very system it is trying to operate outside of.

A privately governed institution that derives its fiscal authority from the host sovereign is not an alternative to that sovereign. It is a licensee of it.

Proposals emerging in the network state space address this by making a network bank the host sovereign’s consolidated tax collection agent. A single institutional interface would handle compliance and remittance on behalf of all members, in the host currency, under the host framework. This may be administratively more efficient than individual filing, but it compromises fiscal independence. Either way, efficiency can be engineered with smart contracts and AI.

The question is whether the network bank’s intermediation between members and sovereign tax systems serves the sovereign’s existing framework or builds toward the network’s eventual independence from it.

Bitcoin is the unit of account this model depends on at advanced stages. Every balance sheet, every contribution agreement, every fiscal negotiation needs to carry a Bitcoin-denominated reference value alongside its nominal currency value.

Operational currencies can function across different chains and protocols. What determines how much human oversight any given monetary function requires is how far it sits from Bitcoin settlement. The further from Bitcoin’s security model, the more the human oversight layer needs to mirror Bitcoin’s own public good properties — decentralised, independent, verifiable, with no single point of capture.

Global credentialed public accountants operating as nodes in a decentralised professional network provide that oversight, acting in the public interest independently of all institutions and states.

The network society that tries to reach V5 without this underneath it has built collective fiscal capacity on a fiat basis, which is only a better-administered version of the old problem.

The truly ambitious and most appealing communities will be those that offer what people come to Bitcoin, web3 and to network states for. Freedom.

What I am working on

CREDU is the ecosystem concept for this model - with AI-discoverable expertise signals and verified credentialing for public accountants on open blockchain.

It is designed to operate across borders - digital and geographical - on a Web of Trust without dependence on any single professional body or jurisdiction. It supports the creation of a profession-led advocacy and trust layer needed for full participation in post-national economies.

So if you are an accountant working with clients who are leaving, or already living across borders without proper advice - or if you want to try it for yourself - get in touch.

If you are building for network states, I hope this piece has convinced you that getting the tax layer right is not optional if you are serious about reaching V5. Otherwise, you are building on sand.

Electra Frost is a Chartered Tax Adviser and Fellow of the Institute of Public Accountants, with a Masters in International Taxation (UNSW) and 25 years of specialist practice, using Bitcoin and open blockchains since 2013. Founder/facilitator of CREDU academy and systems (PoC in development). Deputy President, IPA Malaysia Member Advisory Committee. Based at Network School, Forest City, Malaysia.

Full profile: graph.electrafrost.com
Inviting contributions: https://github.com/electrafrost/tax-residency-to-network-residency

It is a serious claim, and it does not survive much scrutiny.

Code is execution. It performs an executive function.

The legislative function, deciding what the rules are, and the judicial function, interpreting those rules when facts are ambiguous or contested, are different tasks.

The separation of powers doctrine will be mirrored in a network-first economy because it has to be. Any system that exercises authority over people, assets or decisions ends up needing all three powers separated.

Societies separated these powers because concentrated power cannot be trusted

Montesquieu was writing from a civil law tradition, not a common law one, so this is not some Anglo legal habit that only makes sense to people from a few countries. Common law and civil law systems express it differently, but both recognise the same basic problem: the people who make the rules should not be the same people who execute them and then decide what they meant when something goes wrong.

People raised under either tradition - common or civil law - are used to some form of recourse. If network societies and agentic systems do not offer an equivalent, they will struggle to attract or retain anyone beyond a technical minority.

Early DAO governance already showed this

If you compress rule definition, execution and dispute resolution into code and token-holder voting without designing an independent arbitration function, there is no way inside the system to interpret what happened or resolve it. The 2016 DAO exploit showed this. The community had no governance mechanism to determine whether it was theft or legitimate use of the code as written.

The result was the Ethereum hard fork, itself an extrajudicial intervention, necessary because the design had compressed all three functions into code. The people who lost confidence left and the network split.

Some later blockchain projects introduced arbitration mechanisms. Proposals we are seeing now include dispute resolution and legal infrastructure for agents.

The point here is that when you design those functions, you are rebuilding separation of powers. So do you admit that and design it deliberately, or rediscover it after your society forks?

Agentic-economy thinking risks repeating this pattern

It compresses governance into execution and leaves rule-setting and interpretation either assumed, minimised or pushed outside the model. There is a lot of attention on registries, programmable payments, AI agents, new wrappers for legal personhood and jurisdictions designed around code-first coordination. Much of that work is useful in the network societies sandbox.

But the problem to solve is not new legal personhood for software. It is about proof-of-control:

• How agent actions are tied back to human authority, intent and liability.

• Who authorised the action, under what constraints, for whose benefit, against what rules, and who answers for it when things go wrong.

Machine execution is fast, scalable and opaque. That increases the need for accountability and review, not lessens it.

Our networks can replace corporations as organising forms

Our networks can replace corporations as organising forms, with agents cryptographically linked to personhood for legal authority, intent and liability. Then we do not need to create fake personhood through incorporation.

The problem to solve is how agent actions trace back to accountable humans, not whether software should be treated as a new category of legal person. But that accountability does not come from code alone. It requires human judgement, professional standards and trust.

Why I keep returning to history

At Network School, Balaji Srinivasan talks about re-decentralisation and encourages people to read historical texts while building new systems people would rather opt into. I agree with that instinct. Build the new thing rather than trying to reform the old broken model and the people clinging to it.

But you still need to understand what cannot simply be discarded. Why certain structures emerged, what problem they were solving, and what happens when you remove them without replacing the function they performed.

That applies to separation of powers. It also applies to qualified practitioners.

Professional people are trusted for reasons that go beyond state authority. They bring an instinct for standards, judgement, ethical duties, interpretive discipline and public standing developed over long periods of institutional life. That does not make the professions perfect. It does mean they offer value that protocol engineers often underestimate.

My concern is not that they are absent. It is that they are not visible at the level where the architecture is being formed.

Honestly, I may not be hearing every voice in these spaces, but my impression since becoming involved in the crypto and network societies movement is that qualified practitioners are mostly being engaged around compliance, structuring and government interface. That is useful, but it is a different purpose from helping shape the governance design itself.

Public accountants and tax advisers are trained inside these distinctions every day. We do not write the standards but we work within them - prepare, classify, evidence and report. When there is dispute, courts, tribunals and regulators interpret and apply the rules. That discipline teaches you where a function starts and stops, how authority is allocated, and what records will settle a dispute.

That is why protocol engineers need these professionals alongside them when they design governance systems. When AI starts designing those systems without us, we will not get a second chance to be included.

What we learned early in blockchain

You can disintermediate their roles, but if you want adoption, you still need to bring the disintermediated people into the design and adoption path, for trust to be transferred from human intermediaries into the new systems.

That was the motivation behind CREDU platform. When I designed it as the major project of my applied blockchain diploma, the principle was the same one I still argue for now with a network-first implementation of ‘decentralised professional association’: merge the members, not their professional bodies. If you give qualified people an incentive pathway to contribute their expertise and advocacy to the network directly, you gain network effects through their participation.

Network Effects 101.

Qualified practitioners belong at the frontier, not behind it

I want qualified accounting, legal, tax and governance specialists - and committees of their professional bodies - at the frontier of agentic network design, where new economies, societies and jurisdictions are being shaped, like Tools for the Commons.

Right now, as far as I can see, I am the only member of my profession advocating publicly for these disciplines to be part of the design conversation. That needs to change.

CREDU Academy is my attempt to start it (“every new movement starts with a school” - Balaji at Network School) whether or not our professional bodies support it. But I would rather they did, and I think it’s their interests to help us lead in this transition rather than follow it.

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If every hard case ends outside the system, the system was never governance for the commons. It was just software and proprietary ambition, distanced from the open source ethos we claim to represent.

This is why I am opening CREDU Academy: a residency for accountants and technologists to collaborate on building these systems and the professional governance around them. I'm an original V1 member living at Network School, Malaysia/Singapore, where I work on international tax and professional collaboration solutions. If this interests and motivates you, I want to hear from you. electra@electrafrost.com

Thanks for reading - new get the word out!

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The profession is splitting between practitioners developing enough technical literacy to stay relevant and practitioners who are not. It’s not because they lack the capability, but because it is still being treated as optional.

That is not a comfortable thing to say.

A respected peer recently framed it as “two camps - those who can build and those who can’t - and that’s OK.”

It is not.

The camp that cannot build also cannot properly evaluate the SaaS it stacks, adapt tools to its own workflows, or manage its security and ethical obligations. That is professional vulnerability.

So why are more of us not learning to build our own tooling now that AI has made it so accessible to do so? Because our Continuous Professional Development (CPD) market is not teaching us how.

The structural conflict

There is a version of operational AI adoption in accounting that goes like this: attend a presentation, be reminded not to use free versions, get a list of vendor tools for accountants, subscribe, wait for the next feature release.

Most CPD is just product awareness dressed as professional development. The sponsor’s goal is product adoption with each CPD hour making the practitioner more dependent on vendors, not less. Content that teaches practitioners to build their own alternatives reduces vendor lock-in, and that kind of content does not get sponsored.

The profession has spent 15 years in this pattern. Practice management, accounting ledger add-ons, client portals, document management, cash flow and forecasting, advisory - each wave of “accounting tech” deepened vendor dependency and added subscription fees without developing our underlying literacy. AI is next, and moving faster.

The thought leadership problem

Most accounting tech thought leaders are structurally incentivised to amplify cloud products and ecosystems. The people feted in vendor-sponsored award lists are the ones whose influence drives product adoption and that is their value to the accounting apps ecosystem. Much of this is market development with a friendly personal brand attached, not independent thinking about the future of accounting.

Critical voices do exist. Angela Shi of Empathetic AI and CA ANZ CEO Ainslie van Onselen have both pushed back, arguing that professional judgment and accountability cannot be automated away and that practitioners remain on the hook regardless of technology used. But these voices are influencing high level policy speak, not offering solutions that practitioners are grasping for on Monday morning.

Our industry events are not helping us to understand governance technologies either.

CPD conferences still wall off crypto and blockchain into a standalone category stuck in 2021 speculative-investment framing, while AI gets centre stage. That misses where the technologies now intersect. Cryptographic verification matters to AI governance because it enables identity, authority, auditability and tamper-evident records in systems that will increasingly act with autonomy. AI agents are already transacting in stablecoins and crypto because that is what works for autonomous software moving value without human intermediaries.

These technologies are converging, and our events are curated by people working from an outdated mental model who dismiss frontier expertise because it does not fit the sponsorship deck. I have written about this convergence and what it means for the profession’s public interest mandate.

Who should be getting up on stage

The people who should be leading AI CPD are the practitioners already building.

Trevor Monaghan is delivering hands-on AI training through valuation workflows and argues that your ledger should stay the system of record, not try to become your AI vendor. Christopher Dodson encourages SME accountants to solve their own problems with tools like Claude Code, in practitioner forums. Lance Rubin is teaching financial modelling across CA ANZ and ACCA while warning against AI being layered onto weak foundations. Wei Xiang Chan teaches crypto sub-ledger integration with accounting systems and compliance through Web3 Accountant, and will be amazing with AI. Daryl Aw has built more than a thousand RPA robots for accounting firms and teaches practitioners to build their own automations.

I’ve been with Network School in Malaysia since September 2024 learning from technical builders at the intersection of AI, Bitcoin, blockchain and cryptography because accountants should not be passive users of these systems. We’re obligated to the public interest and work with evidence, control, assurance and consequences, all central to AI. CREDU Academy is a three-month residency where accountants can build working tools, test AI systems and develop technical judgment through collaborating with programmers, and while piloting open, peer-recognised credentialing.

These are the people who should be leading our CPD now. The profession keeps platforming vendor influencers and coaches. We are past that.

What real technical CPD actually looks like

Real technical CPD starts with the landscape: understanding the difference between AI, machine learning, deep learning, generative AI, RAG and AI agents, because most practitioners are being sold “AI features” without knowing what those features actually are, how they work, or where their limits sit.

It means learning how an API works, how to read technical documentation, how to map a workflow, how to build a simple automation and understand what it is doing, and how to test whether an AI tool actually delivers what the vendor claims. It means writing effective prompts, evaluating tools against each other for the same task, and reviewing AI-generated outputs before they go to a client.

It teaches you to develop your own proofs of concept and deploy agents into your practice, and to get far enough to work directly with engineers who can turn your prototypes into production software faster and more cheaply than ever before. An AI agent can send emails, move files, reconcile data, and transact on your behalf without asking permission at each step. If you do not understand how that works, you cannot govern it.

It teaches AI governance from the point of execution, embedding controls into automations and agents as they run rather than auditing them after the fact, because AI does not care about your responsible-AI policies sitting in a PDF and governance that only exists in documentation is not governance.

It only matters what we have actually created to solve a problem with AI, not how many CPD points we racked up listening to people talk about it. That is the CREDU response to traditional CPD: peer-to-peer professional development where practitioners learn from and verify what each other has shipped, tested and deployed.

The gap is compounding

The gap between practitioners who can direct these systems and practitioners who depend on vendors to package them for us is compounding now. Every month it gets wider. When your core ledger and practice management platform is now choosing your AI vendor for you, the dependency has moved somewhere most practitioners are not even looking.

The profession can keep consuming CPD that serves sponsors, or it can start building the technical literacy that serves practitioners.

That choice is being made right now, whether we acknowledge it or not.

My name is Electra Frost and I am the founder of CREDU Academy in residence at Network School, Malaysia/Singapore, where I work on international tax and professional collaboration solutions. If this interests and motivates you, I want to hear from you. electra@electrafrost.com

The immediate issue was not the gen-AI tool itself producing unreliable advice. Builders experiment constantly in environments like this and early systems are expected to be rough. When I proposed a safer rules-based approach, the more important observation was how quickly people assumed that tax analysis could be automated once information was collected.

That assumption revealed a structural misunderstanding.

Tax statutes are written as deterministic rules. It’s easy to assume “code is law”. A statute defines conditions and specifies outcomes when those conditions are met. Residency conditions, filing triggers and withholding obligations are all written in this logical form. In principle a machine can apply such rules instantly once the inputs are known.

The difficulty is that professional tax work rarely begins with reliable inputs.

Before any rule can be applied a practitioner must determine which jurisdictions may be relevant, which types of income exist, and what reporting regimes could apply, There’s a skilled discovery process in surfacing what’s relevant and testing what the client knows is relevant, leading to the necessary full disclosures. Globally mobile individuals often combine self-employment income, passive income streams and digital asset movements. They may originate from one country, while residing in another, working for and founding companies other countries, and moving through several others during different jurisdictional tax years that overlap.

Determining which rules matter is itself part of the analysis.

This became clear during a discussion about Malaysian tax residency for foreigners. Malaysia’s territorial tax system relies heavily on day-count tests and where the work is performed. An individual who spends 182 days or more in the country during a calendar year is generally treated as resident for tax. One may also become technically liable for tax on overseas income as a non-resident. Tax treaties may prevent double taxation but it is not clear how to invoke them in some situations.

The statute also allows residency to be established across adjacent years when temporary absences do not prevent it. Administrative guidance provides examples of absences that may be treated as temporary but does not define a precise boundary or clarity on situations that depart from traditional employment and business patterns.

In practice that means determining residency can involve incomplete travel records and ambiguous facts. Someone may live in with longer-term intentions in Malaysia for several months, leave for a period, and return later. Whether that absence qualifies as temporary depends on surrounding circumstances and the interpretation that could be defended if questioned by the tax authority.

The statutory rule itself remains deterministic. The uncertainty arises in determining whether the inputs required for the rule are reliable and whether the interpretation of the rule is sufficiently certain to apply. Interpretation of the tax law against a set of circumstances most likely also requires specialist local practitioner experience with similar client cases previously decided on by the tax authorities - and that knowledge is not made available as public guidance.

This distinction matters for how AI systems are designed.

Large language models operate probabilistically. They produce outputs based on patterns in training data rather than applying formal rules. That makes them useful for certain tasks. They can summarise legislation, identify relevant rulings, surface potential issues and assist practitioners in organising information.

They cannot determine whether ambiguous facts satisfy a legal rule or whether a particular interpretation can be defended before an authority.

Legal systems operate through accountability. Someone must decide that the available information is sufficient and that the interpretation taken is reasonable. Someone must also accept responsibility for that decision.

Tax compliance illustrates this clearly. Returns must be lodged even when information is incomplete or administrative guidance remains unclear. Practitioners must determine whether the available information is sufficient to take a position and whether the interpretation can be defended if challenged. Professional standards require reasonable care and an intention to comply with the law. The practitioner who signs the return accepts responsibility for that judgement.

This responsibility does not disappear simply because AI systems are involved.

A qualified accountant’s tax agent licencing and insurance provides safeguards of responsibility that have not been engineered into AI. Without one signing your tax return, you’re on your own. The law doesn’t recognise machine agency any more than an unlicenced human tax adviser.

The discussions that followed the initial debate gradually converged on a practical architecture for combining deterministic rules, probabilistic analysis and professional judgement.

The first layer involves structured information collection.
Systems can guide users through questionnaires that capture travel history, income sources, entity structures and jurisdictional connections. This reduces the ambiguity that often appears in informal descriptions of personal circumstances.

The second layer involves deterministic rule engines.
Once relevant facts are captured, statutory thresholds, filing triggers and assessable income can be evaluated directly. Residency day counts, filing requirements and treaty conditions fall naturally into this category.

The third layer involves AI-assisted analysis.
Language models can review the collected information and identify missing details, highlight potential issues and surface areas where interpretation may be uncertain. In this role the system acts as an analytical assistant rather than a decision-maker.

The final layer remains professional judgement.
A licensed practitioner reviews the analysis, interprets ambiguous facts and determines whether the rule can be applied with sufficient confidence. That practitioner accepts responsibility for the position taken, putting their insurance and licence at risk should they be unable to defend it on the taxpayer’s behalf.

Each component performs a function suited to its strengths. Deterministic rules handle the logic encoded in legislation. Probabilistic models assist with organising information and identifying uncertainty. Practitioners evaluate the facts and interpret the law.

The discussion that began with a simple AI tax tool therefore exposed a more fundamental design question:

The issue was not whether AI could assist with tax analysis. The issue was where deterministic legal reasoning begins in a domain where facts are often uncertain and legal interpretation can remain ambiguous for years.

Recognising that boundary has implications beyond software design. Communities experimenting with new institutional structures increasingly involve members who operate across multiple jurisdictions. Supporting those members requires systems that combine technical infrastructure with responsible professional oversight.

The most productive role for AI in this environment is not replacing practitioners or merely reducing them to “human-in-the-loop” but reducing the analytical overhead required to reach informed judgement.

This is one of the reasons I am opening CREDU Academy at Network School, a residency for accountants and technologists to collaborate on building these systems and the professional governance around them.

Deterministic legal rules require reliable inputs. Probabilistic systems can help determine whether those inputs are sufficient. Professional judgement determines whether the rule can be applied and whether the resulting position can be defended.

I’m living and building at Network School, a community of techno-optimists designing the social, economic and governance infrastructure for internet-first countries (Network States). We all want AI to go well. Nobody here is trying to accidentally build SkyNet. But wanting AI to go well and helping to make sure it does are two different things, which is why I did these courses.

The AGI Strategy plan starts from documented present failures - Australia's Robodebt scandal and overseas equivalents - and works forward: what minimum controls must exist before AI is allowed to touch a person's access to money in a tax-transfer or UBI context, at AGI speed and scale?

Every serious AI governance proposal assumes independent, trustworthy intermediaries exist somewhere in the system. None of them explain where those intermediaries come from or what enforceable obligation binds them. My Frontier AI Governance plan answers that question.

These action plans belong together as downstream and upstream interventions to help prevent predictable social harms. Please read them in order.

Action Plan 1: AGI Strategy

Summary

This plan builds defensive infrastructure for Australia's tax-transfer and welfare system - and a future UBI context - against the specific risk of AI being deployed in decision and enforcement workflows at machine speed and scale, before the safeguards exist to contain it.

The first output is a one-page minimum safeguards checklist for any automated system that can pause payments, reroute payments, raise debts, or recover money - written for the people who build these systems, approve them, and sign off on the controls.

I'm well placed to do this: 25 years as a public practitioner working directly with government agencies' systems, controls, and evidence, currently serving on a member advisory committee of a professional accounting body. That gives me both the technical and social vocabularies to write controls that engineers can implement, and a professional platform to put them in front of the practitioners who will deal with the consequences of these systems.

The first draft is underway. The goal is a published v0.2 with clear evidence requirements and a defined role for non-government professional oversight; and tested with at least one blunt expert reviewer before it goes out.

This is downstream AI safety and AI Controls: it makes accountability and human authority verifiable in high-stakes money systems, so agentic automation cannot trigger a legitimacy crisis at scale when failures or abuse occur.

Strategic Assessment

Public trust in digital systems collapses when AI is capable enough to automate fraud and administrative enforcement at scale, faster than humans can review or contest it.

The specific threat I'm defending against is "Robodebt/Indue on steroids" - applied to Australia's current tax-transfer system, and eventually a UBI context: AI-driven government and contractor systems that can restrict, redirect, delay, or claw back people's access to money using automated decisions built on low-quality, mismatched, or adversarial inputs, with weak appeal paths and opaque accountability.

If there is no mandated human intervention and restoration plan, we get machine-speed exclusions and a legitimacy crisis when people realise there is no clear "who did this", no auditable chain of authority, and no fast way to restore access to funds relied upon for daily life. As AI systems become more capable, this becomes a balance-of-power problem: control over money access can lock people out of society entirely.

This is why my intervention sits in AI Controls and infrastructure defence rather than AI Alignment. The practical focus is two things: Proof-of-Controls with tamper-evident logging and continuous monitoring so automated actions can be verified after the fact; and Personhood and authorised delegation, meaning verified human sign-off before any agent takes a consequential action. Both must be unavoidable conditions, not optional features.

This is a distributed governance design - no institution should be expected to independently verify its own automated decisions, and government agencies are no exception. The gap is a practical threshold: a baseline and audit rubric that requires cryptographically verifiable control and verified human authority before any agent takes consequential actions with public funds.

Downstream, defensive infrastructure turns “opaque government systems that target specific populations” into harder-to-abuse systems by limiting scale and making harmful automation reversible and attributable to humans. This will matter as AI capabilities rise.

Theory of Change

The deliverable is a short checklist for any automated system that can affect someone’s access to government payments or tax-transfer money, with a clear evidence list: who approved the action, what data was used, what the system did, and how it can be checked. Tested with two or three people who have worked in government payments, audit, or procurement, it becomes a practical ‘no go-live unless this is in place’ standard, one that independent professionals such as tax agents can also apply from outside the agency when the system affects their clients.

The goal is traceable actions, fast challenges, and a clear process to restore access when the system is wrong. That is what reduces the Robodebt failure mode as systems become more agentic.

The riskiest assumption is whether people in governance roles will treat a concrete go-live requirement as more serious than general AI safety talk. I will test it by running those reviews and asking one question: would you use this as a go-live condition in your context? Then publish v1.1 with their edits.

This is designed as two-way accountability. Governments and vendors will keep pushing automation. Tax agents and public practice professionals deal with the fallout for real people, they understand the evidence trails and control failures. Giving them a defined role to check evidence and escalate problems early spreads accountability beyond the agency and protects the public trust that digital government systems depend on to function.

Concrete Commitments

The first output is a 500-word public post: minimum safeguards for automated decisions that affect access to public money, in the Australian context. One blunt expert review before it goes out, with a direct brief: what’s unclear, what’s unrealistic, what’s missing. Then a revised version, for targeted distribution.

That is the test. If the people who build, approve, and audit these systems won’t use it as a go-live condition, it needs more work. If they will, it becomes the foundation for a broader standard.

Action Plan 2: Frontier AI Governance

Summary

I am working to establish global public accountants - bound by a codified, enforceable public interest obligation - as a missing accountability layer in AI systems that handle financial data, transactions, distributions and reporting across private enterprise and public services.

Every serious governance proposal examined in this course implicitly assumes trustworthy intermediaries exist. Almost none explain where they come from or what obligation binds them. The International Federation of Accountants (IFAC) Code of Conduct (Ethics) already does this: it requires accountants of member bodies globally to act in the public interest, not merely for employer or client. That obligation is enforceable, carries reputational and disciplinary consequences, and travels across jurisdictions. This is structurally different from voluntary AI ethics, corporate ESG, or government oversight that lacks technical capacity.

I am building this from a specific position: professional accounting credentials with a global outlook, technical fluency in AI and decentralised systems, and an embedded residency at Network School where the academy and lab launch in June 2026. The commitment for Q2 2026 is the founding document for the Accounting Technologist pathway at CREDU Academy, and the AI Safety and Governance Lab alongside it.

As an AI Safety Action Plan - this addresses the ‘constrain and withstand’ defence layers as we begin building institutional capacity to verify, assure, and intervene before harm scales.

What is the public interest obligation?

The International Federation of Accountants currently represents over 188 member organisations across 143 jurisdictions. The accountancy profession is primarily self-regulating: it sets its own standards, enforces its own ethics, and disciplines its own members, with the degree of external government oversight varying by jurisdiction.

At the centre of that self-regulation is a defined public interest obligation.

IFAC's Policy Position 5 defines the public interest as the net benefits derived for, and procedural rigor employed on behalf of, all society - not the client, not the employer, not the state. Every qualified accountant operating under an IFAC member body carries that obligation as a condition of professional standing, across borders and across the systems they work in. It carries reputational, disciplinary and licensing consequences.

That is what makes it structurally different from a voluntary ethics pledge or a market commitment to AI safety.

Strategic Assessment

The failure mode I am defending against is designer-operator-judge collapse: where the same entity builds and configures the AI, evaluates whether it is safe and fit for purpose, deploys it in decisions affecting people’s money, identity and rights, and judges complaints when it goes wrong, with no independent professional verification at any stage.

Large firms are already recreating this through selling AI consulting to clients they audit, which is the structural conflict that produced textbook ethics case studies. More recently this conflict has been exposed through a top tier firm contracting with the Australian Tax Office and misusing sensitive government data. Without intervention, AI governance in financial systems defaults to commercially conflicted self-certification.

The pattern of harm when this verification layer is absent is already documented across jurisdictions. Australia's Robodebt Royal Commission showed exactly what scales from this failure: automated decisions without qualified oversight, contractors without public-interest duties, no independent body to verify and stop harm, and government designing, running, and judging complaints about its own system.

The Indue cashless debit card showed the same pattern: private contractors with closed systems, opaque decision rules, fragmented appeals, no portable accountability and slow processes to invoke freedom of information disclosures.

The Netherlands’ toeslagenaffaire wrongly flagged tens of thousands of families as welfare fraudsters through automated systems, causing financial ruin with no fast correction pathway. The UK Post Office Horizon scandal saw a flawed accounting system generate false evidence leading to hundreds of wrongful prosecutions over two decades - because no independent professional verification layer existed to challenge the system’s outputs. These are not edge cases. They are the documented baseline for what automated systems do without independent assurance, and before AI multiplies the speed, scale, and cross-border reach.

Extend that to AI systems deciding who gets paid, who gets credit, who receives benefits, who can seek remedies and who is protected. The accounting profession already has 3.5 million qualified practitioners bound by the strongest public-interest obligation in any profession, and nobody is yet deploying that mandate in AI governance.

Consider millions have lost their jobs and a Universal Basic Income becomes administered through AI systems. Eligibility is not just processed but judged, with payment decisions made by systems that adapt their own logic faster than any normal audit process can check. Exceptions are handled by a system that learns from challenges and closes them off. Millions of people depending on payments for rent, food, and daily life.

Consider what happens when those systems make compounding errors for thousands, then millions of people. When the government agency responsible cannot explain the decision logic because the system has moved ahead of them, when the non-government contractor who delivered the system and the lab behind the model is not obliged to clean up the mess, and when there is no independent professional with both the citizen-side standing and the duty to say: this decision is wrong and I can prove it, but also who should have governed its execution in the first place?

In the absence of Jedi knights and time lords, global public accountants are just what we need here. The obligation already exists, the network already spans jurisdictions, and the enforcement mechanism is already in place.

Nobody has deployed it yet.

The window is 2-4 years before entrenched path dependency makes reform significantly harder.

If a system cannot reform fast enough, something purpose-built will make it obsolete.

Theory of Change

The goal is a proof of concept for a new professional class: technically fluent, ethically bound, structurally independent, and publicly trusted. I can drive this at Network School through the Accounting Technologist Faculty and AI Safety Lab, with the founding framework published via credu.academy and a prototype Frontier AI Assurance Framework that refers to IFAC’s existing standards.

If that proof of concept is credible, Proof-of-Control standards and IFAC-anchored assurance frameworks can enter professional practice before the norm-shaping window closes. That fills the trusted intermediary gap every governance proposal assumes but none builds.

Three things have to be true: Network School formalises the lab arrangement, at least one IFAC member body engages with the prototype, and a first cohort of qualified accountants can be recruited.

The riskiest assumption is whether the profession moves fast enough. The answer to that is to build outside existing institutions first and make the proof of concept impossible to ignore. Institutions adopt what they cannot afford to dismiss.

Concrete Commitments - Q2 2026

• Publish founding document (3,000–5,000 words): the case for global public accountants as a missing AI governance actor, the IFAC Code as a distributed, jurisdiction-spanning human obligation network that AI governance currently lacks, and Network School as the prototype environment. Via credu.academy.

• Launch the AI Safety Lab: formalise the Network School presence, establish a weekly builders group, integrated with the CREDU accounting technologists’ allotment.

• Begin targeted outreach with priority conversations, including but not limited to:

  • IPA Global - the natural champion for an accounting technologist pathway to its Global Certificate of Public Accounting (GCPA), with recognition of prior learning; and to position this initiative within IPA’s policy and advocacy agenda, not just its education agenda.

  • Senior practitioners working at the intersection of digital identity, verifiable credentials, and government procurement reform in Australia - people whose work on citizen-owned identity and accountable automated systems connects directly to the problems this initiative addresses.

  • Advanced AI Society - to propose the working relationship between the Proof-of-Control technical infrastructure they are leading and the professional assurance system this initiative introduces.

  • Third-party AI evaluators focused on independent model assessment - to explore how professional assurance standards can be mapped onto technical model evaluation, and how the two fields can strengthen each other.

  • Invite ten accountants to the first CREDU cohort, launching June 2026.

The Leverage Point

The technical infrastructure for accountable AI is proof-of-control, proof-of-personhood, and tamper-evident agent registries. Advanced AI Society and their blockchain and cryptography partners are building exactly this, because traceability, immutability, and verification are problems the crypto and decentralised governance community has already solved and can apply to AI.

The accounting profession's role is not to build it. It is to advance the adoption of appropriate internet architecture for safe AI, hold those who don't use it accountable, and be the human verification layer that creates legal imperative where voluntary compliance fails. Human professional controls are more expensive than programmable compliance. That cost is the incentive to get the technical infrastructure right.

Global public accountants, graduated as accounting technologists, are the Big Citizen advocates: the professional class that holds a public trust mandate alongside, but not above, government. They give insurers independent measurability, regulators an assurance standard to point to, and the public a named, accountable professional who answers for what an AI system did, in financial institutions, government procurement, and regulated service delivery.

Instead of relying on AI to self-align or governments and labs to do the right thing, this puts professional obligation and liability in the gap.

Electra Frost is an Australian international tax adviser and accountant with over 20 years in professional practice. She is a co-founder director of Digital Playhouse Foundation Ltd and a long-term resident at Network School, Malaysia, where she is building CREDU - an accounting and tax technologist faculty and AI Safety Lab. If you are a technically fluent public accountant interested in the first CREDU cohort, or if you work in AI evaluation, digital identity, or government procurement and want to have this conversation, reach out to electra@electrafrost.com - or for CREDU apply here

From Nomad to Network

I am Electra Frost. I believe in open, permissionless systems, and since September 2024 I have been living and working among the techno-optimists at Network School in Malaysia. I also live in Fremantle (Freo) in Western Australia, where I’ll soon pilot a similar path: Freo Neuhaus.

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Balaji Srinivasan founded Network School in Malaysia’s Johor-Singapore SEZ as an experiment in seeding a startup society that can bootstrap other startup societies (nodes) which may eventually become connected as Network States, as explained in his book. It has started in a hotel in Forest City- a ‘ghost island’ across the strait from Singapore - a great place for technologists to live, for many reasons.

Large internet communities of aligned people who share a vision of a better future may begin co-living on land; their economic mass that they bring from the digital-to-physical realm could even one day exceed the GDP of existing nation states. The Network State is a global concept that promotes peace and prosperity, not bloody revolutions nor any kind of one-world government.

I understand the internet-first “state” as being made up of many different tribes - independent physical societies around the globe where people can choose to live with others they align with - rather than being defined by where they were born. These high-trust societies introduce global mobility with on-chain, open governance.

I was raised by nomadic parents and have worked online and travelled for most of my professional life. As a Bitcoiner, I’ve chosen to go all in on this path. I was in the first small group of Network School long-termers to move out of the hotel and into apartments at Forest City. I also have a long visa and professional role in Malaysia. I actively invite my colleagues to join me at NS for professional collaboration.

So consider me a Network State maxi - but a conditional one.

High-Trust Needs Accountants and Artists

The network society movement needs to attract accounting professionals and creative people in large numbers if it is to function as a high-trust set of societies, long term. They would work with technologists, founders and governance architects to develop social protections and regulations, particularly around creator rights and finance.

Since September 2024, my personal mission at Network School has been to improve myself first, and to then lay pipelines for accounting and creative professionals to enter this space.

Balaji describes Network School as a campus (in V3) for scaling future Network States (in V4), so at that stage I seek to establish a faculty for accounting technologists and transnational tax coordination. I believe that presence lends legitimacy to support future negotiations for diplomatic recognition. That’s another essay…

Image source: https://balajis.com/p/network-school-2025

25 Years Serving Creativity

For my entire career I have been an accountant for creative people. Before that I was a musician and artist who wanted to help my friends grow legitimate businesses without fear, so I studied international tax and accounting and gained qualifications to represent their affairs to the government and investors.

This grounding purpose of wanting to empower the people I align with has not just set my professional directions, but also my early adoption of internet technologies and Bitcoin, work with cross border startups and DAOs, and the networks I have built with other niche practitioners around the world.

In my unusually nuanced conversations about new technologies with artists and accountants, I have noticed a shared sense of caution, moral code and social responsibility, even when they do not share many outward commonalities. Their values alignment is represented clearly in Bitcoin and open blockchain principles of trust, openness and incorruptibility - as financial and governance tools for the public good.

If anyone can lead accountants toward creative and advantageous adoption of crypto and blockchain with AI, it is artists. We need to bring artists into startup societies first. They will then teach accountants to use the “public good tech” confidently and up to their own standards.

When incentives line up, the builders who show up early are the beneficiaries. Freo Neuhaus is my way of helping that happen in Australia, for Australians, for the arts and for the accounting profession.

Queensland’s Digital Playhouse Experiment

Before Fremantle, I spent five years experimenting with all this in a small coastal town in Queensland. I co-founded Digital Playhouse Foundation (a PBI charity) with learning premises in Agnes Water with my friend Gordon Christian and later Kieran Nolan, who taught kids how to mine Bitcoin in a Victorian primary school.

Our centre’s motto: “If you want to play it, learn to build it”

I met Gordon when he made Agnes Water Australia’s first digital currency town in 2018. We built on that with a STEAM centre, STEM with an A for Arts, where we taught locals to use Bitcoin, kids how to code and make NFTs, and ran blockchain developer and Bitcoin builder projects with Stacks Australia. The aim was to create conditions for better social and monetary outcomes after COVID, by showing artists and locals new ways to upskill and earn with emerging and converging technologies.

We were inspired by the original School of Arts movement in Australia, which brought new technology and knowledge to ordinary people for self improvement during industrial revolutions. Digital Playhouse was like a School of Arts movement for the fifth industrial revolution and resembled an early Network School in its mission to “bring the global to local”. More here on X.

Although based in remote Queensland, we were plugged into large innovation networks and funded by the Stacks Foundation to build community around Australia. Kieran extended the mission to Victoria with Consensus21 School. We tried to attract innovators from around the world to make Agnes Water a blockchain hub with us, capitalising on our digital currency town story.

The problem was distance. Agnes Water and 1770 are pristine, and tech centers in paradise sound great, but for many founders, educators and investors it was simply too remote. After the first 90 day Network School V1 cohort, ending Christmas 2024, I went back to Agnes Water with Grace from Playhouse AI, following Balaji’s encouragement to scope it as a possible NS node.

Being very committed to the broader Network State vision, this was a real mission grounded in Digital Playhouse objectives. Grace’s unrelated Playhouse.AI startup for AI filmmaking made it feel serendipitous for her to join me! We got to work.

But after a month of brainstorming and location scouting, we accepted that the distance from a major urban centre was the real blocker.

Discovering Freo’s Perfect Spark

I’d been hankering to visit Perth again since speaking at WAWEB3 in 2023, and an old friend Kylie T (the rock and roll accountant) invited me to stay. So I packed up in Queensland and was heading back toward Network School for V2, but via Perth to check it out properly.

There I presented on Network States at a blockchain meetup. That is how I met Simon from Fremantle, and the Freo Neuhaus idea was born. Fremantle (a.k.a Freo) is the first settlement of Perth and is a working port. It has beautiful beaches and a historic town centre full of art, entertainment, cool old buildings and people from mixed backgrounds already doing a lot in arts, entertainment and startups. It reminded me of my home town of Newtown in Sydney, but by the ocean, with a stronger community and underused spaces.

Simon Owen showed me around and gave me a base in Freo. He is a legal adviser to startups and involved in civic groups here, so our conversations moved quickly to questions about where power and culture are actually heading. We found common ground in a worry that as AI and big platforms expand, they quietly take over the channels where human creativity lives, while people hand over more of their agency without noticing. We both wanted to see what it would look like if a port city like Fremantle decided that creative work and technology-for-good were the core things worth protecting and investing in.

Freo is a remote port town in close proximity to what matters - a place where we can fit in without creating an enclave from scratch. It has a direct train to Perth and the airport - only a five hour flight from Singapore - with active blockchain and startup scenes on both sides.

That social infrastructure and geography matters. Freo sits close enough to the Network School “mystery island” and Asian hubs to stay plugged into global trends, while still being very much an Australian town with its own history and character from absorbing new communities.

The more we talked, the clearer it became that Fremantle could host this network society in ways that Agnes Water and most of Australia never could. Time to act.

Designing Freo Neuhaus Together

Simon and I talked a lot about Bauhaus too. It was a working school founded in 1919 in Germany where artists, designers and craftspeople experimented with new materials and machines, and treated buildings, objects and daily life as one design problem.

Neuhaus is our nod to that spirit in Freo: a new house where art and technology sit close to the people working on money systems and rules, in the same conversations, with real streets of heritage buildings and engaging culture just outside the door.

After making this shift, I went back to Network School and updated Balaji that Agnes Water was not the right node for Australia, and that we should back Fremantle instead. Since March 2025 I have been returning to Freo every month, getting to know the place, speaking with locals, and finding allies and locations for a long term plan.

I do not want to design it alone or copy/paste my Network School experience here. The point is to bring in people with more startup community building experience and different ideas to my own, sit them with people who know this place, and build Freo Neuhaus together.

Join the 2026 Pop-Up Launch

We are drawn to what Freo Neuhaus stands for - to protect and strengthen the human spark.

First we had startup companies. Now we are seeing startup societies emerging, including Network School, internet first communities with meeting places on land where people can lock in and fast track their projects on shared network effects and economic mass. Freo Neuhaus is to become one of these.

It is launching as a pop up neighbourhood that seeds a startup society, a place where founders, artists, technologists and civic builders can work side by side and deliberately shape the conditions they want to build in.

Freo Neuhaus welcomes tech builders with purpose, creatives with curiosity and conviction, and founders, funders and civic allies in the AI age who want open, transparent civic infrastructure and more widely shared opportunity. We are designing for AI to be the assistant and financial machine that supports creative work, public goods and infrastructures, not a replicant that replaces it.

Sometime in 2026 we may run a 14 day Freo Neuhaus pop up in Fremantle with local, interstate and international innovators. Then, if it goes well, we’ll do a longer one. The outcome will be a social blueprint for a startup society and the founding scope for a permanent node in Freo.

Be a Founding Member

Subscribe for future announcements - collaboration with Arrayah - you can just do things!

If this sounds like where your project should live and launch, we’d love to have you at the start. Expressions of interest and applications will open at freoneuhaus.com.

APPLY TO FREO NEUHAUS

Bitcoin's pivotal monetary function as a Unit of Account (UoA) redefines how we measure, compare, and transact economic value, to create a consistent global standard.

Most people understand Bitcoin as a Store of Value (SoV, digital gold) or Means of Exchange (MoE, peer-to-peer e-cash), but its potential as a Unit of Account (UoA) deserves greater exploration.

In this article, I'll introduce an accountant's perspective of what it means for Bitcoin to serve as a Unit of Account, its significance for the global economy, and a potentially effective approach to implement. The Composite Fractionalized Money approach I propose is inspired by Dirac Delta, Adopting Bitcoin 2023, and the Stacks launch of sBTC protocol. This is my first draft of a vision and idea, to be built on with welcome feedback.

Understanding Bitcoin as a Unit of Account

A Unit of Account is one of the foundational functions of money, providing a standard for pricing goods, services, and contracts. It enables us to compare value consistently across transactions. Traditionally, currencies like the US dollar have fulfilled this role, offering stability and universal recognition. Bitcoin, with its fixed supply of 21 million coins, introduces an entirely new paradigm: everything of value—from commodities to services—can be priced and measured in satoshi denominations.

With 100 million satoshis in a single Bitcoin, Bitcoin's divisibility and fungibility make it uniquely suited to serve as a global UoA. Its fixed supply eliminates inflationary distortions, ensuring a consistent and transparent standard for value over time. Additionally, limitless denominations may be created upon each satoshi, offering flexibility for valuation, effectively achieved through Bitcoin-anchored layers and other methods.

Meanwhile, the 21 million Bitcoin cap ensures it can never be inflated. As a borderless, decentralized asset and the world’s most secure, decentralized and permissionless network, Bitcoin also offers global consistency and durability. As such, it transcends the limitations and inevitable obsolescence of fiat currencies in international trade and economic systems.

The Standard of Contract and Pricing in Bitcoin

William Jevons, in his 1875 analysis of money, outlined its four primary functions, where what we now call "Unit of Account" comprised both the measure and standard of value. Building on this, the "Standard of Contract" highlights money's role in solving the double coincidence of future wants problem, providing a stable benchmark for deferred payments and agreements.

Adopting Bitcoin as a UoA and "Standard of Contract" has profound implications for contracts and pricing. As a "Standard of Contract," Bitcoin provides a reliable and incorruptible reference for deferred payments and long-term agreements. A Standard of Contract establishes a stable and trustworthy reference point for pricing obligations, agreements, and deferred payments. This stability is essential for ensuring fair and consistent economic interactions, especially over long periods or in volatile environments.

For globally distributed Network State diasporas, as envisioned by Balaji Srinivasan, this role becomes even more significant. Bitcoin can enable consistent pricing and financial reporting across interconnected cloud-countries, establishing a parallel economy where economic value is measured in satoshis regardless of which currencies are used.

While businesses within these societies may convert to local currencies for Nation State reporting and tax obligations, appropriate crypto accounting software and exchanges can facilitate these conversions, ensuring compliance without compromising the integrity of Bitcoin as the foundational UoA.

Pricing goods and services globally in satoshis could simplify trade and create a universal economic language. Imagine a world where every product, from a loaf of bread to a luxury car, is denominated in satoshis. Businesses and consumers alike would benefit from a transparent and consistent pricing system, seeing the complexities and risks of fluctuating fiat exchange rates as abnormalities that should not persist in a borderless economy.

Implementing Bitcoin as a Unit of Account: Fractionalized Composite Money

To make Bitcoin's UoA function practical, the economic leaders of a Network State can implement a Fractionalized Composite Money system. Here’s how it may work:

1. Satoshi-Denominated Pricing: Suppliers globally price goods and services in satoshis, establishing Bitcoin as the universal standard for value measurement. This effectively makes Bitcoin our global reserve asset, replacing the historical roles of the USD or gold.

2. Flexible Payments: Customers make payments in any combination of digital currencies, stablecoins, or tokenized Bitcoin using the Stacks sBTC protocol, a trustless Bitcoin-pegged asset on the Stacks blockchain, enabling decentralized movement of BTC into and out of Bitcoin layers, while leveraging the Bitcoin network's security and transparency.

3. Smart Contracts and DEX Integration: A decentralized exchange (DEX) and liquidity provider to facilitate conversions between payment currencies and satoshi prices and to allow merchants to dynamically settle any currency back to BTC via a Bitcoin-anchored smart contract layer like Stacks. This approach should prioritize security while accommodating multichain, interoperable frameworks that interact effectively with global financial systems.

This is proposed as a practical solution for Bitcoin to function as a Unit of Account, by not being the Means of Exchange, while addressing the multi-currency reality of our economy.

It’s important for our solution to acknowledge that while fiat and other currencies fluctuate relative to Bitcoin's consistent value (1 btc = 1 btc), it is necessary to enable composite payments and automated conversions.

Fractionalized Composite Money also addresses a critical cash flow issue for merchants: reconciling the difference between the value of fiat or crypto currencies and Bitcoin at the time of invoicing versus payment. Our system could align compensation with the Bitcoin value established at the time of invoicing, by dynamically adjusting settlements to account for fluctuations in fiat or other currency values at the time of payment.

As Bitcoin adoption grows, fluctuations relative to fiat currencies are expected to diminish over time, aligning payments more closely with the Bitcoin value at pricing.

The Role of Public Accountants in the Bitcoin Era

The shift to Bitcoin as a UoA marks the next phase of the "internet of money." Money is technology. Accountants and money work together. All accountants become technologists.

Accountants of the Network State are uniquely positioned to explain and demonstrate what "1 BTC = 1 BTC" means in practice, guiding businesses and societies toward practical adoption of Bitcoin as a Unit of Account in global systems.

Public accountants around the world, as trusted advisors, are uniquely positioned to guide the majority of people and organizations through this transition. Just as accountants have helped their clients adapt to the digital age, accountants can help them adopt and adapt to Bitcoin-based systems.

By mastering Bitcoin concepts and related technologies, and aligning with the Network State vision, accountants can elevate their profession and support everyone in navigating the future of money.

Conclusion

Bitcoin as a Unit of Account redefines how value is measured and transacted globally. Using Fractionalized Composite Money systems, we can implement Bitcoin as the standard for pricing and reporting, while payments occur in various currencies reconciled to Bitcoin's consistent value. This is the next phase of the "internet of money," and public accountants will play a critical role in helping businesses adopt and adapt to these systems.

Now is the time for accountants to take the lead in helping the world understand Bitcoin's true purpose and demonstrate how it will be used as a Unit of Account in global financial systems.

Want to get involved? Send your ideas and feedback to Electra Frost at: mail@electrasignal.com

The task of integrating crypto transactions into standard accounting systems has been a persistent challenge for accountants, Web3 start-ups and crypto company CFOs alike.

At Electra Frost Accounting (my original practice) we first encountered Bitcoin in 2013, with an animated film production client who was paying overseas artists with BTC. In these early days prior to any official tax and accounting guidance, we exercised professional judgment to apply FOREX accounting and found that our traditional accounting software did not support cryptocurrency (it still doesn’t).

We were excited by this innovative new form of money and curiously prepared complex Excel spreadsheets with currency conversions to post journals into Xero, to complete our clients’ Profit and Loss and Balance Sheet. Some years later, crypto portfolio tracking and tax calculation software became available but it was only suitable for individual tax clients and simple operators. For businesses with double entry accounting requirements and millions of transactions, we created Excel workbooks with so much data that they crashed!

With the basic tools available to us we did our best to make our clients’ company financial statements balanced, audit-proof and lender-friendly. While our SME clients’ crypto usage was largely confined to payments, mining rewards and basic investments, this approach with Excel and manual journals was fairly manageable. In recent years, however, with clients channelling more exotic crypto activities through their companies, involving new tokens, transacting with NFTs, yield farming and DeFi, we’ve been exploring more innovative accounting tools developed by start-up founders in this space.

Accountants On-Chain project exploring crypto accounting

In recent years our accounting and tax focus has expanded from managing crypto payments and investments to more customised crypto accounting for issuing digital collectibles and utility NFTs, and for crypto-native Web3 start-ups, DAOs and exchanges.

This new scope necessitated a deep dive into the capabilities of various crypto accounting subledger and back-office software, with our Accountants On-Chain project interviews with lots of crypto accounting software experts to share their knowledge with us. As a result of this project in 2021 to 2023, we surfaced a number of new software options and accounting approaches to support our clients entering web3.

New regulations calls for better digital asset accounting

The Australian government recently proposed a regulatory framework aimed at protecting consumers within the crypto ecosystem, with draft legislation anticipated in 2025 following further consultations. This framework seeks to apply to digital asset platforms, aligning them with the risks and regulatory standards of traditional financial systems, with asset holding as the regulatory anchor point. Financial services licensing would apply to certain asset holding arrangements where a ‘financial product’ is identified, whilst a ‘financialised functions’ regime would cover specified activities that involve digital assets that are not financial products but still need to meet additional minimum standards. Such functions would include token trading, token staking, asset tokenisation and funding tokenisation.

The proposed regulatory framework considers tokens with various utilities—ranging from membership attestation and service or goods redemption to access rights and resource management—under a regime designed for financialised functions. This approach calls for accountability in token sale and distribution processes, and will necessitate careful record keeping and quite sophisticated reporting for regulatory compliance. Therefore, the blockchain industry will need to up its game in the accounting department and will need accountants to guide them.

One critical area of our latest explorations in crypto accounting subledgers is understanding how these systems handle the custody of customer assets and associated liabilities, particularly through "For Benefit Of" (FBO) accounting. This capability is crucial, as it directly addresses the complex accounting principles and regulatory risks associated with crypto assets and tokens with various utilities.

Crypto tax software vs accounting solutions

Contrary to common assumptions, crypto tax software is cut out for the job, especially when businesses scale beyond occasional crypto payments. The intricacies of DeFi, NFTs, and smart contracts, combined with the need to track multiple wallets and apply various accounting methods specific to how the assets are used, demand a more crafted solution. Crypto subledger tools stand out by offering the automation needed to manage these tasks at scale, ensuring consistency, integrating with tools like Xero or QuickBooks, and facilitating detailed reporting without necessitating two sets of accounts for both accounting and tax.

The challenge often begins with setting up an efficient and compliant accounting system. This involves not only choosing the right tools but also updating internal finance policies and processes to accommodate the unique aspects of crypto transactions, including digital asset registers and statements of ownership and control over wallets.

Despite the automation these tools provide, the initial setup, data importation, verification, and reconciliation processes still require a significant amount of manual effort. However, once configured, these systems can significantly streamline the monthly financial reporting process, making it more manageable to produce accurate financial statements.

This operational efficiency is critical not only for internal management but also for demonstrating control and transparency to investors and regulators. The need for such systems becomes even more apparent for crypto exchanges, which require software capable of handling extremely high-volume transactions and separating customer assets from the company's assets, all while providing detailed reports for auditing and compliance purposes.

From our experience, while many start-ups initially attempt to manage their crypto transactions through manual methods like Excel and crypto tax tools, the transition to a dedicated subledger system significantly improves their reporting efficiency and accuracy, managing burn rate and runway, and ability to attract further investment.

Having navigated clients with various crypto accounting software set-ups, we've observed a range of functionalities and implementation challenges, particularly with so many new blockchains and token standards. Yet, we’ve found most software providers are willing to introduce integrations for new customers and support the implementation process in a structured way, and the overarching takeaway is the positive efficiency impacts these tools have on managing crypto transactions in a business.

Whether it's a start-up crypto exchange or an e-commerce operation accepting crypto payments - systemising this in Excel is a wildly inefficient and error-prone way to handle digital asset transactions. If transitioning from manual to automated crypto accounting processes seems daunting, you may discover that recent advancements in specialised software and refinements of internal finance processes and policies for other crypto business have made it more feasible.

For crypto businesses, founders and their accountants, engaging an experienced crypto accountant can help to guide the process, and set a solid foundation for your company’s growth and compliance.

Please share your experiences and thoughts in the comments below, we’re interested!

During a recent Institute of Professional Accountants Town Hall Webinar, it was revealed that many professional accountants are not fulfilling their Continuous Professional Education and Development (CPE/CPD) requirements due to reasons like lack of time and the cost of training.

To address this issue, I proposed the idea of publicly displaying CPE/CPD achievements and logged hours to encourage compliance and prioritise continuous learning. By leveraging public blockchain technologies, accountants can establish trust, prove their value, and ensure transparency and integrity in the profession.

Publicly Visible CPE/CPD Achievements: 

It is crucial for accountants to prioritise their CPE/CPD training to stay up-to-date with industry changes and maintain their professional competence. By publicly displaying achievements and completed hours, we can inspire fellow accountants to prioritise continuous learning, inspire public trust, and promote our expertise.

“What's that? You want privacy? We work in the knowledge economy! What is there to hide? The letters on the end of your name don’t mean much. Putting your CPD achievements on a public blockchain for all to see is good marketing!”
- Electra Frost

The Accounting Profession <> The Digital Truth Engine

In a rapidly evolving world in which the public and government perceive our roles becoming diminished by automation and AI, we must prove our value in an undeniable way.

By leveraging Bitcoin and open blockchain technologies, the “Digital Truth Engine”, we can become part of a highly secure network that ensures transparency, trust, and integrity, and we can be rewarded for it.

In one of the world’s leading trusted professions, it makes sense for accountants to explore the Trust Machines mission and operate at the forefront of the most socially impactful technology this century.

Accountants, as business and taxpayer advocates, must acknowledge the role of Bitcoin and public blockchains in addressing various socio-economic challenges and their growing influence in the global financial landscape.

The best way to learn is by applying the technology to solve our own problems first!

An Open Blockchain Solution for Professional Credential Verification: 

A most compelling blockchain use case for the accounting profession is a system that indisputably validates what they know. Verifiable Credentials (VCs) introduced by the World Wide Web Consortium (W3C) provide some background about cryptographically secure and machine-verifiable digital identities and credentialing. 

A decentralised blockchain-based application would enable accountants and accounting bodies worldwide to contribute to the development, validation and recognition of professional qualifications and achievements. This approach facilitates sharing the most up-to-date knowledge at speed and, through the use of verifiable credentials and decentralised identity management, we can ensure the integrity, equity and transparency of the CPE/CPD compliance process.

Solving CPD Compliance Problems by Digitising Our Knowledge Assets: 

To address non-compliance with CPD requirements, we need to automate auditing processes and ensure transparency and fairness. By leveraging AI technology in an open blockchain application, professional bodies can efficiently and securely assess a large number of members’ CPD records, saving time and resources. This also enables real-time visibility of CPD compliance records, ensuring professional competence standards are met across our industry.

Fragmented Credential Verification: 

Efficient validation of credentials is hindered by the distribution of CPE/CPD records and certificates across various private servers, apps and emails. This leads to time-consuming record-keeping, verification challenges, and increased risk of inaccuracies and fraud. A centralised app or member portal does not substantially fix these problems. The effective and efficient approach is to digitise the CPE/CPD as its achieved, and issue the credentials as NFTs (knowledge assets) to the blockchain address for the professional’s self-sovereign digital identity over which they have full control, including control over all digital assets associated with it.

Proving Attendance for Online Learning:

Verifying genuine participation in online courses and workshops can be problematic. By using Non-Fungible Tokens (NFTs), we can provide irrefutable proof of attendance and participation, addressing this challenge. Training providers can issue NFTs with granular attendance and content data upon completion of the CPE/CPD activity, which enhances the credibility of digital credentials with origin and authenticity directly traced back to the issuer's address on the blockchain.

Interoperability:

By implementing a multi-chain decentralised application (dApp), we can retrieve and verify credentials in the form of NFTs including POAPs from different blockchains, providing a unified and verified record of professional development that’s easy for a user to maintain without having to deal with bridging their tokens.

Limited Global Reach of Professional Development Programs:

To cater to members accountable to professional bodies in other countries, serving offshore clients or expanding their operations globally, the application needs to be truly decentralised and borderless. Connecting professionals globally can enrich CPE/CPD training with diverse international insights. This allows accountants to stay abreast of global practices and emerging trends, and achieve career mobility.

High Costs and Subscription Models of Existing Solutions:

In Web3, the trend is shifting away from traditional subscription fee and rental models. Instead, value exchange is increasingly based on tokenisation and smart-contract microtransactions. By offering a subscription-free application and enabling direct transactions for CPD training, we can reduce costs for accountants. All members, including training providers, are empowered to have full ownership and control over their digital knowledge assets and services, creating a participatory economic structure with the decentralised application (dApp).

Decentralised Marketplace for Specialised CPD Training:

In today's complex accounting landscape, many professionals focus on niche areas and industries, often downsizing to solo practices. This shift has highlighted a gap in the market for specialised CPD training, as generic content lacks specific context. A decentralised marketplace driven by Peer-to-Peer CPD contributions can address the lack of specialised CPD training. This marketplace offers relevant and tailored content, enhancing professional growth through peer-to-peer learning and experience sharing.

Peer-to-Peer CPD introduces a competitive threat but also a new revenue opportunity for existing CPE/CPD training providers.

Accountants can repurpose training content from providers - for example, one takes a general "Australian Income Tax Residency Workshop," to create their own training materials specific to, for example, USA Dual Tax Residents or Music Industry. When an accountant enhances existing training material and it's sold as a new product, the original content creator can automatically receive a share of the sales, facilitated by smart contracts.

Inadequate Peer Review and Quality Control in CPD:

We can have quality AND quantity!

Implementing a community-driven model for peer review and quality assurance ensures that the most relevant and accurate training content is rewarded.

Call to action for my accounting peers!

Next week - Part 2 Concept Demo

Let’s start learning how to use the world’s most decentralised, secure and robust peer-to-peer networks so we can lead these new approaches in our professional development!

Whether you're a suburban tax agent, a corporate accountant, a professional accounting body, or an associated industry professional, YOU have the opportunity to define “the future of accounting”, inspire trust, and be the trendsetters who can elevate the public perception of our roles and value.

Stay tuned for Part 2 next time, to see a basic Proof of Concept!

We will demonstrate the key functionalities and advantages, based on using the Stacks blockchain and sBTC to bring this proposed P2P-CPD and VC solution to life.

This post was written during the Bitcoin Writers Cohort.

Thanks for reading ElectraFi Insider! Subscribe for free to receive new posts and support my work.

A proposed merger of Australia's three major accounting bodies signals a move towards further centralisation, a trend viewed as outdated and futile by leading technologists in the digital economy.

As members of the accounting industry grow frustrated with their professional bodies and turn to online communities and emerging technologies like AI and blockchain, a more democratic and innovative approach is emerging: forming a Decentralised Autonomous Organisation (DAO).

A DAO is a significant departure from traditional unions and mergers. Rather than forming a dominant entity or amalgamating Australia’s three major professional accounting bodies into a single centralised entity, a DAO would merge the members of these bodies into a member-governed digital organisation.

This approach includes the existing professional bodies in a non-hierarchical DAO structure, without replacing or controlling them. A DAO's inclusive model could be more appealing to the professional bodies than a conventional merger, once blockchain as a governance technology is better understood..

Leveraging open blockchain technologies like smart contracts, and cryptographic currencies and tokens, a DAO offers an immutable voting system and and can also empower members to collaboratively scale their practices and monetise their expertise. Importantly, it avoids the concentration of power in a centralised authority like a "One Merged Accounting Body". Instead, a decentralised monopoly of members can vote and execute on collective decision-making. 

Members of a DAO operate in a trustless, transparent manner, achieving consensus and interacting securely and autonomously, without the need for a centralised coordinating body. A DAO may also automate membership management, facilitate transparent voting on standards and policies, conduct peer reviews, manage continuous professional development (CPD) programs, and oversee ethical compliance reporting.

Accountants, who value reduced costs and increased profitability, are drawn to how DAOs can return more value to members than traditional bodies. In a DAO, members - whether token holders or developers/contributors - collectively decide on the organisation’s operations and finances through voting, eliminating the need for a centralised management structure and the associated agency costs.

Such direct control and ownership by all stakeholders could align member interests, leading to more efficient resource allocation, greater trust, and reduced conflicts of interest, ultimately fostering better governance and outcomes.

DAOs' flexibility to adapt and evolve based on member consensus ensures they remain relevant and responsive to the profession's changing needs. Accountants must look beyond the narrow professional education and future outlooks presented by their accounting bodies, acknowledging a rapidly evolving global economy where Bitcoin, blockchain, and AI converge for cheaper, faster, permissionless, and borderless business.

In future, many accountants may see a global standardisation of accounting standards, tax laws, and ethical codes to be in their best interests. Accounting practitioners and their bodies could self-represent on a global DAO-scale to support policies that level the playing field for smaller businesses participating in the decentralised digital economy in order to compete with large corporations.

Bitcoin, like a DAO, is democratic due to its decentralised nature - every participant can influence through the process of consensus on the network, ownership is widely distributed and there is no CEO or board.

Just as countries could agree on Bitcoin as a global currency standard while using local currencies, accountants worldwide could unite under an Accountants' DAO while remaining part of traditional bodies. A DAO could become the standard-setting domain for all professional accounting bodies.

Building an Accountants DAO on Bitcoin aligns the world’s finance professionals with progressive social and economic thinking, leveraging the security and universality of the world’s most decentralised network. Recent innovations have increased Bitcoin’s functionality, composability, and scalability, enabling the development of DAOs on top of its network (more on this in my next article). 

The formation of a DAO also empowers smaller practitioners to compete with large firms for procurement and talent. By creating a network of niches, freelance professionals can form a decentralised monopoly that redistributes marketplace value equitably.

In conclusion, forming an Accountants’ DAO is a strategic move that starts with proposing a democratic, transparent, and efficient governance model of professional association.

As we adapt our business models to a Bitcoin-style future, a DAO is not just a viable alternative to merging our professional accounting bodies – it's a necessary evolution to keep the public accounting industry competitive, at the forefront of digital transformation.

Comments welcome!

Please share this with accountants you know, to seek their views.

If you like what I am doing and might want to join in, contact info@accountantsonchain.com and subscribe to this newsletter for updates. Please also follow Electra Frost on LinkedIn.

This post was written during the Bitcoin Writers Cohort.

The ElectraFi team is attending the Accounting Business Expo in Sydney on the 22nd and 23rd of November. We’ve partnered with AEM Journaler to show you crypto accounting software for Xero/QB and with HODL Labs to give you an immutable digital memento of the event… a POAP with CPD benefits!

REGISTER FREE FOR ACCOUNTING BUSINESS EXPO NOW

We would like to invite you to meet us there at Stand F31. Discover how we can support busy accounting practices with their small business clients when they adopt crypto and digital assets in their operations. We take a systemised and strategic accounting approach to internal controls, bookkeeping and reporting for crypto.

We know that when your clients achieve a streamlined implementation and integration with their accounting tech stack, it leads to a positive impact on your accounting business too. Let's grab a coffee and have a chat at the expo!

THE ELECTRAFI POAP

POAP stands for 'Proof of Attendance Protocol'.

POAPs are digital mementos that anyone can collect to celebrate a meaningful experience, and are commonly used for conference attendance. POAPs are unique digital collectibles (NFTs) that can be saved in a digital wallet that is connected to your decentralised digital identity on the blockchain.

This is a fun easy way to experience owning a digital asset hands-on!

To keep the onboarding simple without any crypto involved for first-timers, we will have Steve McFadyen from HODL labs showing attendees how to download the POAP app from Google or App and claim their POAP. You can claim it in one of three ways, depending on how experienced you feel!

1. MOST EASY - with an email address

2. EASY - with Steve’s ‘no-coiner’ method. He gives you yourname.onpoap.eth as a wallet address

3. THE WEB3 WAY - using a digital wallet like Metamask or Rainbow, for example, with your Ethereum wallet address or ENS domain name, like Electra has below. You can see her POAPs here.

We also believe it is the future of claiming and displaying our CPD.

If you share your ELECTRAFI POAP ON SOCIAL MEDIA and tag us, we will give you FREE registration to our upcoming ONLINE DIGITAL ASSETS LEARNING EVENT FOR 2 HOURS VERIFIED CPD (with a certificate) worth $175

When sharing your POAP, please tag us on either LinkedIn | Facebook | X twitter and post the URL/s in your registration form to the event below for free ticket.

Learn to guide clients on responsible digital asset adoption strategy, crypto accounting software and business tax planning.

ATTEND OUR SPEAKING EVENT

Scoping crypto clients' service requirements and fees

Thursday 23 Nov, 12pm at Theatre 2 (Independent Reserve)

REGISTER FOR ABEXPO FREE

Electra Frost will be demonstrating our traditional year-round service model and scoping approach for business clients, and how we approach it when a client uses crypto in their operations as well. This will include some quick case studies with a Web3 business model canvas.

Every accountant does what works best for them, however we can gain insights from this and take a collaborative approach. With properly scoped accounting services we can create long-term benefit for businesses entering the blockchain and crypto space and set realistic expectations from day 1.

Don’t be quoting for hours of laborious spreadsheet preparation! Crypto accounting can be managed efficiently and cost effectively with the right software.

Jakub from AEM Journaler - Your Easy Crypto Accounting Solution will also hop up on stage to show everyone how data from different wallets is aggregated into Journaler crypto accounting subledger app, where it’s all classified and made ready to be pushed into Xero or QuickBooks. Load your transactions and let Journaler do the rest.

You can also catch AEM Journaler exhibiting in the Startup Zone and presenting at the start-up pitches in Theatre 3 at Thursday 2pm to 3.30pm.

We look forward to seeing you there!

Yesterday I hosted an Accountants On-Chain online event for some members of the marvellously supportive Small Business Accountants & Advisers Brain Trust, Australia Facebook group.

The event was prompted by this tongue-in-cheek post by a member:

Hey just putting this out there- since we get more information and support from this group than CPA,IPA, CA - can we set up our own body to compete!

There was an outburst of humorous enthusiasm in comments but some caution, as it could “destroy something beautiful” and “take fees to deliver”.

So I replied:

Hit me up. We can set up a DAO (Decentralised Autonomous Organisation). It won't cost us anything if we contribute know-how and support in a Value 4 Value model. Here's one I'm a member of: lawfidao.com Australian lawyer-led

… because my main role in the group is having a blockchain answer for every problem!

I’m Electra Frost. I’m a Fellow member of one of Australia’s three professional accounting bodies, the Institute of Public Accountants, a registered tax agent, and a Chartered Tax Adviser. I'm also a member of Blockchain Australia, and firmly believe in the convergence of the accounting and blockchain industries as their ethics and futures in finance are aligned. Today, I want to share my vision for redefining and restructuring association in the accounting profession through socially transformative decentralised open-source technologies, specifically blockchain and Decentralised Autonomous Organisations (DAOs).

The Need for Change

In my long career as a public accountant and a blockchain enthusiast, I've realised the immense potential of Bitcoin and open blockchain in redefining how not-for-profit and professional associations represent and benefit their stakeholders. Traditional centralised models are becoming obsolete in the face of digital transformation. This is where public blockchains and DAOs come into play, offering a new paradigm of transparency, efficiency, member-driven governance and value creation.

Initially, when I was thinking of an applied blockchain project for my advanced diploma, I was concerned that our professional education was not keeping pace with rapid changes in the economic and technological landscape. It’s so difficult for blockchain industry people to find accountants, bookkeepers and tax agents with the knowledge and technical skills to support them. Reasons for this that are beyond the scope of this article, so let’s fast forward to the solution - peer to peer CPD in a DAO!

How much do our CA/CPA/IPA post-nominals really inform the public about our experience, expertise and ethics? Imagine if our professional recognition and standing was backed by the accreditation of our peers, through network consensus, independently of our professional memberships. Changing times - we can learn and earn more, using blockchain.

But why stop at CPD? That problem is a mere symptom.

There are other problems in our profession to solve, which I read about every day in the SBAABTA group.

The more problems solved, the more value is created for more people, right?

So….. back to first principles.

Understanding Blockchain and DAOs

Blockchain is a governance technology, it’s also an accounting technology but is so much more than a technology for financial transactions; it's a foundation for building transparent, immutable, trust-based systems. It offers the ability to scale exponentially and reach consensus as additional users are added to the network.

You can simply think of blockchain as a daisy chain of transactions. Each block in this chain is validated and added to the existing chain, ensuring that no one can alter the history. This immutability is part of what makes blockchain a game-changer.

Now, imagine applying this technology to create a DAO – a decentralised, autonomous organisation running on smart contract code for potentially millions of strangers to do business with each other in a super automated, trustless, verifiable way, without any third party processors or central authority.

Rules without rulers

A DAO operates on these P2P and consensus driven blockchain principles, while ensuring that every decision, every transaction, is transparent and immutable. It's a radical shift from traditional hierarchical structures to a flat, distributed model of governance and value creation.

Who decides who can call themselves an Accountant?

It was shocking to be reminded that anyone can call themselves an accountant when Joe Kaleb posted in LinkedIn:

”We all know that the term “accountant” is not regulated in Australia like are the terms “solicitor” and “tax agent”. In other words, anyone can hang out a shingle and call themselves an accountant even if they don't have any educational and professional qualifications as well as relevant experience.

The Institute of Public Accountants (IPA) has suggested restricting the use of the term “accountant” in a submission to the Parliamentary Committee inquiry set up in the wake of the PWC controversy: (Page 7: Gaps in coverage: unregulated professional service workers)

The IPA has told the Joint Parliamentary Committee on Corporations and Financial Services that there are thousands of people who can legally call themselves accountants without being subject to any accountability framework or governance requirements. “

David Young offered an insightful solution with a bit of history:

Agree - perhaps it’s time for a return to the old Public Accountants Registration board. If my memory serves me correctly it was the CA’s and CPA’s that advocated it be disbanded in favour of the professional bodies taking over its functions.

If the three accounting bodies can’t agree to work together on this, we don’t need to wait. Collaboration over competition!

100,000+ members in a DAO can efficiently reach consensus on what an accountant is and who can publicly wear the digital badge as validated by their peers, to restore our reputations and standing in the public’s view.

(Fearless advocates for the recognition of high calibre BAS Agent bookkeepers as management accountants and business advisors, Heather Smith and Lielette Calleja, will be delighted!)

The Roadmap to Decentralisation

The roadmap for a DAO - or let’s say a Decentralised Professional Association (DPA) - would encompass development of a Whitepaper, a minimum viable product (MVP) and community (MVC), a blockchain token economy model, smart contract design and decentralised digital IDs. There are also many organisational structuring, governance, legal, tax, financial management, marketing, membership and industry liaison considerations for the Establishment Committee (Founding Members).

Members of a Decentralised Autonomous Organisation (DAO) typically consult in meetings to reach consensus on the above through a combination of digital communication platforms and blockchain-based voting mechanisms. They discuss proposals, strategies, treasury allocations and operational decisions in virtual meetings or forums, and then use smart contracts on the blockchain to facilitate transparent and secure voting.

To DAO or not to DAO… yet?

It’s not possible or legally advisable to go in “DAO first”. Decentralisation is the goal, not the starting point. The Establishment Committee starts centralised to ensure members are protected. We’re dealing with accountants and lawyers here!

Initially, these activities would be conducted by the Founding Members forming an Establishment Committee that meets over centralised digital platforms, in public view for transparency and trust. This “normal” initiation should attract members who do not need to be intimidated by the technology. Initially, this process should ensure that every member's vote is recorded and immutable, reflecting the collective decision of the group in a democratic and decentralised manner as closely as possible to how it would be done on smart contracts in a fully decentralised DAO.

This roadmap is not just a plan but a vision for highly scalable learning, earning and reputation management ecosystem where continuous professional development (CPD) content is upgraded and accessible through a decentralised, autonomous education system in which members’ contributions of knowledge and reputation become a form of currency.

The model I envisaged to decentralise professional education and credentials was initially inspired by participation in The School of Bitcoin open project (under the auspice of Digital Playhouse Foundation, led by education technologist Kieran Nolan).

I am also deeply grateful to Joni Pirovich of BADASL, the Creator Spirit (founder) of LawFi DAO, and to the knowledgeable contributors on its DAO Day Meetings that I learned so much from in 2022. This DAO is still going, and it needs accountants and tax agents, so stay tuned! (more collaboration on the roadmap)

A New Vision for a Post-Facebook World: SBAABTA DAO

The SBAABTA DAO is a mind provoking proposal for restructuring and redefining accounting industry association using decentralised technologies, building on the foundations of a large mutually supportive social media group of small business accountants, advisers, tax agents and BAS agents.

“But why can’t we just do it in Facebook?”

Unfortunately, nobody owns their content on Web 2.0 platforms like Facebook, and there is no mechanism to compensate them for the time and knowledge they contribute to the group, helping one another to overcome the various challenges faced in public practice… and with professional associations and the Tax Office.

However, they could be earning if interacting in a Web 3.0 digital environment (on a Bitcoin blockchain layer, for example), through leveraging the largest most secure networks in the world that the resilient organisations of tomorrow are being built on.

Scenario 1: Tom shares a useful business valuation tool with his peers

• Web 2.0 Facebook: Owns Tom’s data. There is no mechanism for Tom to be paid. Tom hopes some people use his services or take out a monthly subscription.

• Web 3.0 DAO: Tom own his data. Say, as an NFT that interacts with digital wallet of $CPD coin. Every time someone connects their digital wallet and uses his valuation tool, or their AI agents harness it for a client solution, Tom is automatically paid.

Scenario 2: Dana requests submissions so she can represents tax agents’ woes at an ATO consultation

• Web 2.0 Facebook: Dana is not paid and her reach for submissions depends on Facebook’s algorithm. Or Dana only contacted members of one professional body. Consequently, tax agents in the group were excluded from having a say. She probably spent a lot of time manually preparing and communicating it too.

• Web 3.0 DAO: All of the group can vote, all accounting body members represented, and Dana is paid from Treasury. Her time was saved by using AI-driven encrypted tools to develop the survey and presentation from group content (comments). Those whose comments informed her efforts are automatically rewarded as every person’s contribution in the system can generate currency.

This is the ownership economy in action. There are many other examples of governance and CPD value unlocks that SBAABTA DAO Founding Members are thinking about since the webinar, that will be discussed in the next one. A basic knowledge of blockchain opens up a myriad of possibilities.

The SBAABTA DAO we hypothesised would be designed to not just incentivise and reward its members for certain contributions (Value 4 Value) but to create the largest, most influential and effective decentralised consensus-driven digital membership to solve real problems faced by small-to-medium practitioners in our profession, thereby offering a unique value proposition to its members. It's about creating a system where decision-making is democratised, and all value is distributed to contributors.

A Note on User Experience

The user interface and experience (UI/UX)of the SBAABTA DAO platform, however, may need to look and feel a bit like Facebook so members transition easily. Experience with Web 3.0 digital wallets will require some learning but no more than for MyGov ID. Familiarity with new platforms takes time and gamification may help.

Decentralisation in Practice

In a DAO, the traditional organisational hierarchy is dismantled. Instead of a top-down approach, decision-making is distributed among all members. This model eliminates the need for a board of directors and their associated costs. Smart contracts execute decisions made collectively by members, ensuring transparency and efficiency.

Just as Bitcoin, the Genesis Block for a Peer-to-Peer Electronic Cash system, removed the need for intermediaries such as banks, blockchain-based organisations, such as DAOs, significantly reduce the costs of agency by aligning the interests of certain token holders (like stake holders or share holders, with governance rights) with those of the organisation.

In these structures, token holders are not just investors or passive participants; they are active owners and decision-makers. The use of blockchain technology ensures that governance is decentralised and transparent. Every token holder has a stake in the organisation and the power to influence decisions directly, typically through a voting mechanism encoded in smart contracts.

This setup eliminates the need for traditional management layers and reduces the costs associated with intermediaries, as decisions are made collectively by token holders, ensuring that their interests are directly represented and managed without the traditional agency costs found in conventional corporate structures.

See - Jason Andrew’s bold piece - “Eyebrows raised over Chartered Accountants ANZ’s $90m payroll bill”

... it was intensely discussed in SBAABTA!

Jason says: “Keeping a member body accountable to the members is important – we all have a role to play in that.”

I agree.

Blockchain fixes that. We all have a role in a DAO.

So put a line through ‘Employee Benefits and staff related costs”!

The Role of Bounties, Contributions and Leveraging our IP

In a DAO, tasks are organised through bounties. These are tasks for which individuals can apply, and upon completion, they are compensated transparently. This system ensures that the most skilled individuals are chosen for tasks, fostering a merit-based ecosystem. It's a radical departure from the traditional employment contract model, where managers delegate work down the chain.

We can envisage a blockchain based organisation also empowering each individual with the opportunity to turn their intellectual property into digital assets that can generate passive income (royalties) when used by others, using smart contracts and AI for an automated revenue stream.

There would be no employment contract claiming ownership over the intellectual property you created because no-one is an employee. Everyone is a freelancer in a network of value creation and distribution, with its impact growing in proportion to the number of users — a theory supported by Metcalfe's Law. With this in mind, a system could be designed that provides an provision for contributors when they are unable to actively contribute - i.e., a basic living wage.

• The future of work is freelance.

• The future of taking leave and superannuation guarantee is a Decentralised Universal Basic Income (UBI).

• The future of revenue generating intellectual property is digital assets (for example, working paper templates).

Turning knowledge into a tradeable currency

As we illustrated above with Tom and Dana example of resource sharing and representation, in a blockchain protocol, knowledge contributions can become currency where information and expertise are directly tradable and valuable. Through tokenisation, knowledge can be quantified and exchanged like a currency on blockchain platforms. Subject matter experts can be rewarded with tokens for contributing their insights, by directly solving another accountant’s client problem, or contributing to a knowledge base… or more.

These tokens can then be used to purchase services, access premium content, donated to causes, or be exchanged for other currencies for example. There is no need to pay monthly or annual subscriptions to a membership body or to any CPD or software providers. All benefits are earned and a balance of decentralised social credit is maintained. Member $CPD may also be borrowed or earning interest as lending capital in a pool, i.e., decentralised finance, depending on laws.

Not only is the sharing of knowledge incentivised but also ensures its authenticity and quality. Blockchain's transparent and immutable ledger with use of off-chain Oracles (e.g. legal databases) in an AI-driven marketplace potentially allows for the tracking and verification of information sources and contributions, with automated remuneration of contributors.

These are just high level ideas and not a proposal. Founding members would research the technology, seek legal advice, and consult with the SBAABTA group on their preferred incentive models.

Legal, Tax and Regulatory Challenges

Although a DAO is an ideal structure for operating and organising economic and social activity on blockchain and in web3, generally, I recognise and am experienced with the challenges in establishing a DAO, especially in terms of legal and regulatory compliance. It's not a straightforward path, as DAOs don't fit into existing legal or tax structures in Australia. Running a DAO without an incorporated legal structure may expose its members to certain liabilities and adverse tax outcomes. While the legal, tax and regulatory landscape is unclear in Australia, founders of digital organisations look into registering a foreign entity to commence their journey to full decentralisation and borderlessness.

However, these challenges for Australians are not insurmountable. In most regions they haven't yet made specific rules on how DAO payments should be taxed, either. We need to think innovatively and explore regulatory equivalents that align with the decentralised nature of DAOs, or at least with an early stage DAO, and we can collaborate with the LawFi DAO working group which is paving the way.

Note - DAOs don’t need countries. Members are global.

My view is that our tax systems should accept that DAOs are just computer coding and networks, and therefore are non-entities. For tax purposes, they can be pass-through entities.

It follows that only the earnings of members should be taxable, in their jurisdiction of residency. Smart contracts could take care of the PAYG withholding and payments if the Tax Office is interconnected on blockchain, as it should be. We can help with that, for a bounty!

The DAO can have a special working group for that. It will be a force to be reckoned with.

The Minimum Viable Community

Starting a community-driven project like a DAO requires a critical mass – a minimum viable community. This is especially true in the accounting profession, where influencing CPD standards is crucial. We need to assess the viability and competitive advantage of this model against traditional CPD providers and consider how it can benefit not just individual accountants but the entire profession. This will be determined by the founding members who will prepare an education campaign and invite consultation and submissions from the SBAABTA Facebook group, the three accounting bodies and our other industry associations.

Inclusivity and Disintermediation

Disintermediation in blockchain technology removes the costs of agency by eliminating the need for intermediaries, such as banks or brokers (such as with Bitcoin peer to peer payments), thereby reducing transaction fees and administrative expenses. This extends the disintermediation of various organisational costs, including payment processing fees, middleman commissions, subscription fees, and the costs associated with contract enforcement and compliance.

In a DAO context it doesn't mean excluding people; it's about inclusivity. It's more about removing unnecessary intermediary ROLES (not the people themselves) while ensuring that everyone has a voice and a role to play.

A decentralised model has the potential to allocate greater value to peripheral contributors, rather than centralising it among those at the top of the hierarchy.

Removing the costs of agency but not the people

Directors on company boards are agents and their salaries often represent a significant organisational cost, as they compensate for the expertise, decision-making, and governance responsibilities of board members. However, blockchain technology and disintermediation can potentially reduce these and other agency costs by streamlining decision-making processes and enhancing transparency, leading to more efficient governance structures requiring less intensive oversight and, consequently, possibly lower compensation for board directors.

However there is no reason, in my mind, why the three accounting bodies and other associations cannot join the DAO and contribute their expertise, influence, votes and resources in return for a share of the rewards.

The leaders and teams that make up our accounting bodies are are highly skilled, committed and valued people; many do excellent work for our profession. Organisation member bodies of a DAO could be substantially rewarded for contributions in this leaderless co-opetition model. For example by making submissions to Parliament and influencing consensus across the industry on meeting and being accountable to professional education and ethical standards.

The advocacy of our professional bodies would be strengthened by our streamlined collaboration and our economic incentives to support them.

Disintermediation, in a Decentralised Professional Association context, is a rising tide that lifts all boats.

My Personal Journey and Call to Action

My journey with blockchain started with putting Bitcoin on the balance sheet for clients 10 years ago, which over the years grew my curiosity and evolved into a passion for integrating it into my professional practice. I've set up a Bitcoin ASIC miner and Lightning node on my desk, as I am committed to maintaining the decentralisation of Bitcoin and Lighting network.

I'm constantly exploring how cryptography and blockchain technologies can be applied to small businesses and entrepreneurship, and in the accounting field. I

In 2021 I co-founded the Digital Playhouse Foundation, a registered charity “advancing social and public welfare” through making access to converging and emerging technologies for those most at risk of falling behind. Accountants On-Chain is the knowledge sharing project I lead to support the charity’s social mission, and we are actively Building on Bitcoin with our Stacks Australia Chapter. Co-founder, Gordon Christian, has prepared a Whitepaper proposing to decentralise our charity as a DAO to create transparency over how donations and grants are applied.

My new accounting practice model, ElectraFi, supports accountants to retain and upskill with their clients adopting crypto in a business context and is compatible with this DAO mission.

I invite you to join me in this journey. It's not just about my vision; it's about our collective future in the accounting profession and as small business advocates. We need about 100 intellectually adventurous and reliable people with diverse professional backgrounds to lead this project forward. It's about building a community and culture, not just a technology solution.

Decentralisation is about culture. The technology is adjacent to that.

Why the Future of Accounting is on Open Blockchain

The future of accounting lies in embracing these new self-empowering, highly secure and privacy-centric open-source technologies. Blockchain and DAOs offer a novel way to solve the problems we complain about daily and fully leverage our social capital. It's not just about efficiency; it's about creating a system that is fair, transparent, and member-driven. More centralisation in accounting, however well intentioned and consultative, just costs more of our valuable time and membership fees. Closed systems and private blockchains are not the answer.

“The future of blockchain kind of looks like the future of email. Open system for all users. No central parties control. No walled gardens preventing interoperability. Long term protocol stability.”

- Paul Brody, EY Global Blockchain Leader (read his book: Ethereum for Business)

Finally! (thanks for reading this far!)

As we stand at the cusp of a new era in accounting merging with the future of finance on blockchain rails, I encourage you to think about the possibilities that blockchain presents in an organisational context.

Subscribe to my blog here, for more insights and discussions on these topics. As we small business accountants are the majority of the accounting industry, and we onboarded the population to the digital and cloud revolutions, we’ve got this… NEXT let's collaborate, innovate, and lead the charge in transforming our profession for the better and be the role model for all other industries in the blockchain revolution.

This vision for decentralising accounting with blockchain and DAOs should not remain a theoretical exploration. With a bit of study (recommended books below), a practical, actionable plan can be the result of a collective effort. By embracing these awesome technologies, we can improve our profession, making it more equitable, efficient, and be future-ready with HOPE.

Join in this exciting journey to shape the future of global accounting!

Recommended reading (follow my blog, LinkedIn and Nostr for more!)

• The DAO Handbook, Scott Fitsimones

• Move Over Brokers Here Comes The Blockchain - Dr Keir Finlow-Bates

• Ethereum for Business: A Plain-English Guide to the Use Cases that Generate Returns from Asset Management to Payments to Supply Chains - Paul Brody (a great book for business advisers, but be aware that what he writes about Bitcoin is misleading or out of date. Bitcoin for Business is coming.)

Real blockchain knowledge starts with understanding Bitcoin technology:

• The Internet of Money: A collection of talks by Andreas M. Antonopoulos

• The Bitcoin Standard - Saifedean Ammous

  
  

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  Accountants Survey of Crypto Experience

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The Digital Native Consumer and Crypto

The inclination of digital-native consumers is reshaping the expectations around business transactions. These consumers are anticipated to prefer transacting in cryptocurrencies, valuing speed, privacy, and convenience. Australian SMEs and and digital businesses will eventually need to adapt their payment systems to accommodate crypto transactions and should be monitoring innovative customer engagement trends in both the Australian and online business landscapes.

Key Terms and Concepts in Crypto

To understand the crypto space we need to become familiar with new terminology and concepts, just as we did when we first learned to surf the web. The terms become normalised over time. ElectraFi expects all currencies to become digital this decade, so we’ll need to grasp the difference between centralised and decentralised digital currencies, the applications of blockchain and Web3 to our business models, and comprehend the Internet of Value, which enables permissionless peer-to-peer business without centralised authorities. Cryptocurrencies operate on blockchain ledgers and to be used in this new digital environment fiat money must undergo an upgrade. Bitcoin, with its fixed supply and divisibility into satoshis, offers functionalities beyond a currency, including fast, cheap payments and smart contract capabilities on its network.

Starting with Crypto: A Practical Approach

For SMEs and accountants curious about crypto, a practical approach involves engaging with businesses that accept Bitcoin, understanding digital wallets, and experimenting with microtransactions over the Lightning network. This hands-on experience demystifies crypto transactions. Additionally, exploring crypto point of sales, NFT memberships, and popular crypto spending wallet apps can provide valuable insights. Local Bitcoin Meetups can be friendly places to meet people who are keen to show others the ropes, hands-on, and should emphasise best security practices and transacting with very small amounts to learn how to use wallets.

The Role of Accountants in the Crypto Economy

Accountants play a vital role in guiding SMEs through the complexities of the crypto economy. A technical understanding of blockchain technology, the distinctions between centralised money and decentralised crypto assets, experience with block explorers and different crypto wallets, and awareness of the storage and security best practices with custodial and non-custodial digital assets is essential. Accountants must remain adaptable, continuously learn, and stay open to change to thrive in this evolving landscape.

Crypto is the new money of the internet and isn’t going away, so accountants need to be recognised by their clients as competent advisers in this space. Accountants can also justify how their professional ethics are aligned with the blockchain, which is both an accounting and a governance technology.

As companies adopt Bitcoin, crypto and digital assets they will turn to their accountants for robust financial management solutions, adoption strategies and process-driven implementation.

Decentralisation: Opportunities and Challenges

The shift towards decentralised technologies and accounting firms backing public blockchains offers SMEs new opportunities to scale with increased control over their assets and data, reduced intermediary costs, and potential for new business models. However, this new frontier also presents challenges and risks. SMEs must approach crypto tools with caution, conduct thorough research, and assess their relevance to the industry and customer base. Due diligence is crucial, especially when dealing with start-ups in the crypto space, to mitigate counterparty risks.

The Future of Business in the Crypto Economy

The future of money is digital, with blockchain and cryptocurrencies playing a central role. SMEs and accountants need to position themselves to adapt and thrive in this rapidly evolving economy. Central Bank Digital Currencies (CBDCs), although centralised, could bridge the gap between traditional fiat currencies and cryptocurrencies including stablecoins, potentially leading to widespread use and interconnectedness of crypto technologies and platforms.

Building Trust and Transparency with Blockchain

Blockchain technology fosters trust and transparency in transactions, enabling secure and verifiable exchanges without intermediaries. This innovation has the potential to revolutionise business operations, reduce costs, and increase efficiency.

Additionally, blockchain can significantly streamline the reconciliation process for accountants, as trust-free cryptographic transactions are recorded in real-time on a widely shared and immutable ledger, ensuring all parties have access to consistent and accurate financial data.

Trends and Adaptability in the Crypto Space

The crypto space is fast-moving, with continuous technological advancements. A year in blockchain is said to be a dog year - 7 years. SMEs and accountants must remain adaptable, stay informed, and be prepared to pivot as the landscape evolves. Following influential, entrepreneurial and professional individuals in the Bitcoin and Lightning Network ecosystem, the blockchain industry and web3 start-up and education space, listening to podcasts, attending meetups, and experimenting with various wallets and apps are effective ways to stay updated.

Assessing Crypto Relevance for Small Businesses

Small businesses and e-commerce entrepreneurs can utilise Bitcoin crypto payments for efficient cross-border and peer-to-peer transactions with large populations of consumers that are leading crypto adoption, and gain improved liquidity. Web3 apps will provide decentralised options like secure identity verification and real-time transparent supply chain tracking. Integrating token gating to a business website can restrict access to services, similar to paywalls but without login/passwords, ensuring only verified or paying members benefit. Each business owner will research the global adoption trends relevant to their industry and develop their own strategies, ideally with the guidance of their crypto-savvy accountants and business advisers.

Conclusion

The integration of cryptocurrencies and blockchain technology into the business world offers SMEs and accountants a unique set of opportunities and challenges to mull over. A strategic approach, grounded in a deep understanding of the crypto space and a willingness to adapt, is crucial for navigating this new terrain successfully. By staying informed, engaging with the crypto community, and experimenting with crypto tools, SMEs and accountants can position themselves to thrive in a more decentralised and borderless digital age.

Thank you for reading.

Electrafi is exhibiting at Accounting Business Expo Sydney, Nov 22 & 23!

Join us at the big, in-person, event for the fast-changing world of digital transformation in accounting, business, finance and money. Visit our stand for more information on how we can assist with your company’s or clients’ business crypto adoption strategies and accounting software.

Register for free today. https://i.snoball.it/p/Bu1C/w

#ABExpo

• Accountants On-Chain project continues with Electrafi

• Using Bitcoin in Business - the new layers of opportunity

• Crypto Accounting Academy - join our Australian study group forming

• 2023 Cryptocurrency Conference - Institute of Public Accountants with Blockchain Australia attendance

• Accounting Business Expo - Electrafi exhibiting and speaking about scoping accounting services for crypto clients

• Aus Crypto Con - join Accountants On-Chain on the Whova App if attending

Accountants On-Chain

This Electrafi Insider blog (and upcoming podcast) is a spin-off from the 2022 Accountants On-Chain knowledge sharing project for the Digital Playhouse Foundation charity, a crypto-curious community of accountants, bookkeepers and advisers innovating within their practices to support Web3 and blockchain-based businesses.

Electrafi, the accounting practice founded by Electra Frost (CFO and co-founder of Digital Playhouse Foundation), intends to operate as a social enterprise. We will continue sponsoring the Accountants On-Chain project with webinars focused on the most recent changes to the crypto accounting technology and compliance landscape.

To kick off this exciting culmination of purpose, please join our first Accountants On-Chain webinar of 2023 - Using Bitcoin in Business!

(OK, it’s nearly 2024 but, hey, better late than never!)

Using Bitcoin in Business

BOOK HERE ON EVENTBRITE
Wednesday 1 November 2023 - Online Event
Learn how businesses are extending the capability and utility of Bitcoin beyond the base layer. Demonstrating practical use-cases and apps for accountants to find out what their enterprising Bitcoiner clients may be generating numbers with in the back-office. We'll also look at Bitcoin invoicing with QuickBooks and Xero, and potential ESG scoring implications around Bitcoin mining and its energy sources.

The Accountant Quits - Crypto Accounting Academy

First training cohort. Starting 19 October. Join our Australian Study Group!

Back in 2021, a whole world of crypto and web3 opportunity opened up to me when I started listening to the ‘The Accountant Quits’ podcast. I have learned a tonne from Umar and his guests over the last few years, interviewed him with Request.Finance for two Accountants On-Chain educational webinars, and enjoyed participating in their Web3 CFO Club on Slack. So I was ecstatic for Umar and his pioneering accounting peers when they launched their Crypto Accounting Academy this month.

The 6 week program announced on LinkedIn covers wallets and custody, block explorers, accounting for on-chain transactions, managing crypto in business, tax treatments, accounting standards and audit.

With downloadable guides and templates and access to crypto accounting tools, it looks like an excellent Web3 accounting immersion for CFO’s and Professional Public Accountants alike.

The Electrafi team are enrolling before 19 October, and forming an Australian Accountants Study Group to collaborate on best practices and tax treatments suitable for Australian companies.

Please email electra@electrafi.finance or message Electra Frost on LinkedIn ASAP while applying here if interested.

Message Electra on LinkedIn

2023 Cryptocurrency Conference - Institute of Public Accountants

18 and 19 October at the Melbourne Exhibition Centre

Secure your ticket!

“More and more practitioners are taking the leap in working with digital assets and transactions. So where to now?” (our YouTube video 2:40mins)

“Join the Institute of Public Accountants with Blockchain Australia members for two-days of panel discussions, interactive sessions, networking events and thought-provoking takeaways, as you deep dive into the world of cryptocurrency. Virtual attendance option available.

Be part of the conversation and widen your knowledge on topics including blockchain, tax, crypto compliance, regulation and more. Become well positioned to make informed decisions and help your clients as you hear from movers and shakers, innovators, experts and industry leaders in crypto.”

SEE THE FULL PROGRAM HERE - Electra Frost (Electrafi) will be speaking on 3 panels including preparing for the future of crypto together, the utility of NFTs, and how practitioners can grow with their clients’ business perspectives of crypto.

Accounting Business Expo

22-23 November, ICC Sydney

FREE REGISTRATION

Be our guest - apply here

Visit the Electrafi Exhibition Stand for your free membership NFT and Bitcoin Lightning wallet experience, meet our team and chat with our crypto accounting software partners AEM Journaler.

It will be one of the most fun stands at #ABExpo, we promise!

Scoping crypto clients' service requirements and pricing

Speaker: Electra Frost (23/11, 12pm, Theatre 2)

"Can you do my tax and how much will it cost?"

As accountants, we can usually respond with a standard list of service items and indicative prices. However, scoping the requirements of a client using crypto and digital assets in new and emerging ways presents unknowns and challenges. Join this case-study session to learn how to confidently assess different crypto clients' needs and turn them into profitable prospects.

Be our guest - apply here

Aus Crypto Con

11-12 November at Melbourne Convention and Exhibition Centre

A group of Accountants On-Chain had a fabulous time at last year’s Aus Crypto Con, speaking with local crypto industry exhibitors and listening to speakers in the many theatres, including leading crypto experts from the legal, tax and education domains.

This year’s Crypto Con is in Melbourne and spans over a full weekend.

If you are attending this year, be sure to connect with the Accountants On-Chain group in the event’s Whova app. We will all find each other and have a great time!

Photo: Accountants On-Chain at Crypto Con Gold Coast in 2022, learning about decentralised digital identity from the Verida.io. Now we’re participating in their test-net. It’s always great to meet web3 start-ups in person first, to ask questions and fully appreciate the problems they’re solving with apps that we can learn to use for our professional development.

We hope to see you at one of these events soon. Invite friends!

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Introduction

I decided to join Blockchain Australia after finding that its Members' Code of Ethical Conduct resonates well with my professional accounting ethics.

As a Fellow member of the Institute of Public Accountants (IPA), one of three professional accounting bodies recognised in Australian legislation alongside the Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia, I am bound to abide by principles of professional ethics contain in the IPA’s By-laws and APES 110 Code of Ethics for Professional Accountants.

As a Registered Tax Practitioner, I must also observe a set of ethical standards under the TASA’s Code of Professional Conduct (the Code).

Having operated a professional accounting practice for more than 15 years, I recently pivoted my practice to focus on Bitcoin and blockchain business and accounting. Electrafi (previously Electra Frost Advisory and Accounting) has now become a member of Blockchain Australia, firming up our commitment to the sector.

Comparing the Accounting and Blockchain Realms

Many accountants are sceptical about crypto and what this space represents. It might at first seem like we’re comparing apples and oranges, but we aren’t.

Bear with me here!

They stand in juxtaposition: the trusted domain of accounting and the disruptive Bitcoin and blockchain movement. While accounting is anchored in time-tested traditions and ethical norms, the emerging Bitcoin and blockchain industries represent the forefront of technological evolution …along with unknowns and risk.

However, a closer examination of ethical principles reveals a harmonious alignment, suggesting potential for collaboration and mutual advocacy.

The Time-Honoured Ethical Pillars of Accounting

Accounting and tax practitioners have long been the sentinels of financial truth. Our profession is anchored to a stringent set of ethical standards:

• Integrity: At the heart of our profession lies the principle of integrity. Accountants are expected to be straightforward and honest, ensuring that stakeholders can trust the financial narratives presented to them.

• Objectivity: Accountants and tax practitioners must not allow bias, conflict of interest, or undue influence to override their professional or business judgments.

• Professional Competence: Tax laws and finance are ever-evolving. To navigate all the complexities, continual professional development ensures that practitioners maintain the knowledge and skills necessary to provide competent services.

The Ethical Tenets of Bitcoin and Blockchain

Bitcoin, a pioneering peer-to-peer payment system, promotes transparency, decentralisation, and individual empowerment. It exists on a decentralised network of computers with blockchain for an unalterable and public ledger of transactions.

1. Transparency and Trust: Bitcoin, through its decentralised and distributed nature, promotes transparency. This aligns with a fundamental pillar of conduct in the accounting profession to provide open and honest disclosure of financial information. Much like Bitcoin's blockchain is lauded for its security and trustworthiness, members of our accounting bodies are often regarded as the most trusted professionals.

2. Irreversibility and Integrity: Bitcoin transactions are irreversible, solidifying economic contracts and turning code into economic law. This mirrors the integrity that accountants must uphold in their practices.

3. Incorruptibility and Fairness: The use of Bitcoin contributes to ethics by restoring transparency and preventing fraud, leading to a fairer and more incorruptible society. Accountants, too, are bound by their professional ethics to ensure fairness in their financial representations and play a crucial role in protecting society from corruption and fraud.

4. Ethical Design and Responsibility: Just as Bitcoin's pioneering architecture set a precedent for transparency and decentralisation, it has influenced the ethical design principles of subsequent blockchain and AI technologies. This resonates with the responsibility accountants have in holding Professional Practice Certificates and developing Quality Assurance Manuals.

Blockchain Australia, in bringing the best and brightest in the industry together in the shift to a digital economy, upholds a Code of Ethical Conduct emphasising reputation, compliance and respect for established standards. We see reflected in this Code very similar ethical standards that apply to professional accountants.

Blockchain Australia’s Ethical Code for Members

Blockchain Australia's Member Code, binding upon all its member organisations, lays out a comprehensive set of ethical principles:

• Reputation: In an industry as nascent as blockchain, reputation is everything. Members are urged to ensure their actions cast the entire blockchain industry in a positive light.

• Respect for Rules: The blockchain industry might be new, but it's not the Wild West. Adherence to all applicable laws, regulations, and industry standards is non-negotiable.

• Honesty, Privacy and Confidentiality: These three pillars echo the ethos of the accounting profession. Members must act with honesty in all their business dealings, protect personal information and safeguard information with adequate systems and processes to maintain confidentiality and prevent its misuse.

• Fairness, Respect, and Responsibility: Treating all individuals with fairness, taking responsibility for one's actions, and ensuring accountability are key tenets that align closely with accountants’ obligations to act impartially.

• Competency and Self-Improvement: Just as accountants are committed to continual learning, Blockchain Australia members are encouraged to perpetually hone their skills and knowledge and be appropriately accredited for their roles.

• Conflicts of Interest: Members must ensure that they identify and manage any conflicts of interest that could compromise the integrity or objectivity of their professional conduct.

• Responsibility for Actions: Taking responsibility for one's actions and ensuring accountability is a key principle of the code.

The Ethical Confluence

When we compare the ethical frameworks of these domains, a confluence emerges:

1. Integrity and Honesty: Both the accounting profession and Blockchain Australia prioritise unwavering honesty and straightforwardness in their operations.

2. Professionalism and Competence : There is a shared commitment to continual professional development, competency, best practices and adherence to standards.

3. Accountability: Whether it's an accountant safeguarding financial data or a blockchain professional ensuring a transparent and immutable record of transactions, accountability is paramount.

Let’s Get Together!

The worlds of accounting and blockchain, though seemingly disparate, are bound by shared ethical commitments. This presents a zeitgeist opportunity for collaboration between our industries. Accountants, with their reputation for trustworthiness and expertise, are uniquely positioned to lead and advocate for the blockchain revolution starting within their practices from the moment they start learning about it.

By applying for Professional Membership with Blockchain Australia, accountants can get informed and involved. It’s a first step to help to shape the future of finance and good policy, ensuring transparency, accountability, and empowerment for all.

I value my industry peers’ thoughts on this.

Accountants - contact Electrafi for crypto client help and to strategically fast-track your experience and reputation in Bitcoin and blockchain.

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Hi, I’m Electra Frost

I’m a professional accountant mapping the latest maze of Bitcoin, crypto, De-Fi, Web3 and blockchain rabbit holes for accountants to confidently navigate!!

1. Why this, why now

I care strongly about future-proofing my profession and the small businesses that we advocate for, so I’m always looking for the really empowering technology that can make us all more profitable and resilient in the long-term. I’ve owned an accounting practice for more than 15 years and was an early adopter of digital business technologies. We first put Bitcoin on the balance sheet in 2014 and things have been getting stranger and more exciting ever since!

In 2022, I led the “Accountants On-Chain” knowledge-sharing project with Digital Playhouse Foundation, the charity I co-founded. My revamped accounting practice, Electrafi (www.electrafi.finance), is now continuing that project as a social enterprise and offering helpful services to accountants with crypto business clients.

2. We are building a community here

Accountants On-Chain was a regular gathering of crypto-curious accountants learning from blockchain business accounting and solutions start-ups. Now we’re all getting a bit more serious about skilling up since Australia is leading the world in crypto adoption. Many of our clients are getting more sophisticated and looking to use various crypto & web3 technologies in their businesses.

Crypto-native businesses need accountants with specific experience for their compliance, processes and systems, reporting and advice. But these business owners know and trust their accountants and shouldn’t have to move to a “crypto specialist”. Together, and with the help of my blog and services, we will become more competent to handle their affairs.

3. “What is Electrafi and what am I subscribing to?”

Electrafi is my accounting practice but instead of growing my own base of crypto clients, now I look after accountants’ clients when they adopt crypto in their businesses. I send them back to their accountants when their crypto accounting systems, processes and tax plans are easier to deal with. It’s a co-opetition model.

The purpose of this blog is to share what’s on my radar in the crypto business world so it’s on yours too. There will be polls and useful guides. I hope you will share my blog widely and even contribute!

By subscribing, you will get a newsletter every Monday morning and hopefully you’ll read it by the end of the week. I’ll introduce a paid subscription at some point, after I’ve learned more from my audience about what they’d value.

Let’s make accounting make sense of crypto now!

Subscribe now