In this video and podcast, Randy Johnston and Brian Tankersley, CPA, discuss the Crypto Summit held at the White House on March 7, 2025, and the potential effects for accounting, reporting, taxes and accounting firms. Watch the video, or listen to the audio podcast below (transcript below):
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Transcript (Note: There may be typos due to automated transcription errors.)
SPEAKERS: Brian F. Tankersley, CPA.CITP, CGMA, Randy Johnston.
Brian F. Tankersley, CPA.CITP, CGMA 00:00
Randy, welcome to the accounting Technology Lab sponsored by CPA practice advisor. With your hosts, Randy Johnston and Brian Tankersley, welcome
Randy Johnston 00:10
Welcome to today’s accounting Technology Lab. We want to talk to you about the strategic cryptocurrency reserve, the new announcement and executive order creating the US digital asset stockpile. Now Brian and I have had the good fortune of teaching you about cryptocurrency and smart contracts and blockchain in prior accounting Technology Labs. Today’s episode is not to teach you those things, but to give you a little bit of background on what’s going on now, the day that we’re recording this episode, there is a National Summit on cryptocurrency occurring, and the announcement on the cryptocurrency executive order was just yesterday. But to lay out some of the background on this. I just want to point out that first, we have a AI and crypto czar, David Sacks, who was involved with PayPal initially, and he also went on to create his own venture capital fund, craft ventures. So he’s kind of in play here, if you will. And we know that the different coins that are going to be held in the strategic reserve include Bitcoin, Ethereum, as well as three other lessers that Brian will talk to you about in just a minute. Ripple XRP, who which has a primary mission of replacing the international currency transfers with the Swift capabilities today. Solano and Cardano. Now those are the five basic strategic reserves, if you will. Now you have to think for a minute. You know, what’s it really mean to have a strategic reserve? Well, a strategic reserve is a critical resource that can be released at times of crisis or supply disruptions. So you might know of the Strategic Petroleum Reserve, the world’s largest supply of emergency crude oil, which was created by an act of Congress in 1975 after the 7374 Arab oil embargo, which I recall clearly at the time, and the gas lines and all the stuff like that. It’s not
Brian F. Tankersley, CPA.CITP, CGMA 02:33
magic. Helium reserve we have that was created when we needed helium for nuclear weapons, and now is used to boy cryptocurrency, not cryptocurrency, but quantum computing, by providing a resource for accumulating that helium, which only is created when Uranium decays, so it floats out into space. So when you lose, when you let that balloon go, it ain’t coming back
Randy Johnston 02:59
exactly. And you know, Canada, of course, has the world’s only strategic reserve of maple syrup, and China has strategic reserves of metals, grains and even pork products. So strategic reserves are kind of about those types of things. Now, what we know has been happening is through civil and through criminal proceedings, the crypto currency, Bitcoins have been accumulated, and it’s a pretty stunning amount of crypto that has been impounded, I think is the right word. 198,109 Bitcoin. Which at today’s valuation, is about 18 and a half billion. And we know that much of this crypto currency has been sold off without any oversight. The estimated losses to US taxpayers are around 17 billion, according to some of the reports that Brian and I researched for today’s episode. Now, again, we’re not trying to say this is great, this is bad. We’re trying to make you aware, as our listeners, of some of the goings on with this. So I want I’ve done kind of a long setup here, and I’d like Brian to spend a moment reminding you of the five cryptocurrencies and their asset their attributes, because I think it’s wise that you understand Bitcoin versus Ethereum versus XRP versus Solano versus Cardano and so forth. I think that’s important number one and number two, just the whole background on that. Now, point of disclosure, Brian and I have been around cryptocurrency, and we think smart contracts are a great thing, and we’ve been proponents of this for quite some time, but we’ve also kind of considered the few. Fiat currency, Fiat positioning of stable coin that are backed by a fiat currency, because much of this cryptocurrency has no monetary backing behind it, which obviously has some risk. And we’ve had many of you as accountants tell us we’re on drugs when we’re talking about this stuff. You guys are just tech guys, you’d understand real assets. I don’t know about any of that, but I can tell you, having now followed this for over 15 years personally, and having taught a lot of courses on this, I kind get it, I think. And I would just suggest a little bit further that Brian and I also have attended every AICPA blockchain and cryptocurrency event that’s been held to date. Now, way too much setup, but Brian, can you just give our listeners a little bit of background on these five critical crypto currencies of Bitcoin, Ethereum, XRP, ripple. XRP is the way I usually call that one, Solano and Cardano.
Brian F. Tankersley, CPA.CITP, CGMA 06:04
Okay, so these are all. These are all a list cryptocurrencies. They’re all in the, I think they’re in the top 10, all of them. And so these are the ones that that that, again, President Trump has proposed to create a a stockpile of now, remember the the problem with some of these, with some of these currencies, is that, with crypto generally, is that we don’t follow the Know Your Customer rules, and so it makes it a violation of banking regulations, and sometimes borderline money laundering when people do transactions in this, and it can violate sanctions and all kinds of things like this. We’ve heard that, for example, a lot of rogue regimes like Iran and North Korea have actually been using, have actually been going out and and making purchases and getting the hard currency they need to operate off of their their their ransomware work, and then getting paid in in these cryptocurrencies. So and in
Randy Johnston 07:01
fact, Brian, your point there is spot on, because one of the concerns, and the reason we slowed down our discussion on this was so much of crypto was being used for criminal purposes and involves so much in ransomware attacks. Of course, you have been writing, you know, true tech crimes, and you’ve got all sorts of illustrations of that. But we also know, for example, that theft has been happening on crypto currencies. The most recent one in the last few weeks was a billion and a half of crypto stolen. And, you know, I just can’t, kind of keep watching these. But I also know that there are lawsuits like that against Justin son, where he was misrepresenting crypto and wound up with a lawsuit on that. But
Brian F. Tankersley, CPA.CITP, CGMA 07:45
I think we’ve really turned a corner here. I think this is the, the first step in the legitimization of crypto in financial services. And I don’t know, you know, Congress is going to have to make a lot of decisions on this, and we don’t know what they’re going to do, but we want to, we want you know, because I will tell you that as recently as a year ago, I saw some moves that were made against, against some of these, some of the cryptocurrencies, and it looked like the banking industry was trying to crush it. Okay? Because honestly, cryptocurrencies are an existential threat to against the especially if we had a central bank digital currency, which would be like a US, dollar backed cryptocurrency that’s on a on the blockchain, that would mean that you wouldn’t need to pay your bank for running an account for you. Okay? And so that’s going to that’s going to make things a little more complicated. Okay, so, so I, I think, I think this is the baby step into legitimizing both blockchain technology as well as as well as crypto as a traditional financial service. But you can see the the all of these have been founded in, you know, since 2009 the first one, of course, Bitcoin founded by somebody under a pseudonym Satoshi Nakamoto, and it’s not been disclosed who that is, so it’s still unknown, and that person still has huge amounts of Bitcoin holdings. We have Ripple Labs. Ripple actually had a big SEC lawsuit against them years back and and again, it’s the concern here is that, again, we’ve got three groups that could regulate, regulate any kind of financial asset. There’s the Commodity Futures Trading Commission that deals primarily with derivatives. There’s the banking regulators, the Office of the control to the currency, that deals with currency. And then there’s the Securities and Exchange Commission. And the problem that we’ve had is we’ve had those three that have not really, nobody’s really warmed up to this and said, hey, I’ll regulate it. I’ll take it. They’ve all taken issue with different cryptocurrencies over different things. And I think some of that, honestly, is the rent seeking behavior from the existing marketing market participants that want to protect their. Turf. But I think some of it, too is legitimate concerns about the anonymity associated with some of these things. So we’ve got again, Solana, there’s some concerns over how decentralized it is. Cardano is considered to be regulatory friendly. And again, Ethereum is the one that’s the most interesting, in my mind, because it is both, is both very more efficient from a power from a power usage standpoint, and it can, it can be used not only to exchange value, but also to do smart contracts. And so there, it’s used a lot in defi and nfts. Now I’ve got listed here some strengths and weaknesses for each one. And again, I hope you will go out to our, you know, if you’re listening to this on the pod, on on a on a audio only, I hope you’ll go and look at the tables that we have on the article at CPA, practice advisor.com/podcast, because what I think you’re going to see here is that, you know, Bitcoin is, is the most popular one. It’s got the largest market cap by a bunch, but it also is the most decentral. It is also has it also is the has the high fees. It’s energy intensive. The transactions are the slowest, and it uses a consensus mechanism, or a consensus is really the way you do the bookkeeping on the on the ledger, and the consensus mechanism uses is called Proof of Work. Now, state of New York, many other states that are concerned about climate change have actually taken a stand against Bitcoin mining that is doing this proof of work bookkeeping for the blockchain, because it is so inefficient, because it’s run almost like a real time auction in real time. And so what happens is you end up doing 2050, 100 times as much calculation is actually needs to happen so that everybody becomes happy. And so the the the this proof of work mechanism is a problem as we look at the others. You know, again, there the others generally are a little bit faster than Bitcoin. You know. Some of the weaknesses include some network congestion issues with Solana, some slower development with Cardano. With Ethereum, when the price of it gets up, the the smart contracts become more expensive, because in Ethereum you have ether and gas that are two different pieces with it, and Ethereum not only lets you exchange value, it also lets you buy computing power to execute smart contracts that’s called, again, this fuel is called gas, and so this the you know, dealing with those issues is a significant Challenge. So Bitcoin is here, I think generally, because it’s, it’s the 1.7 billion out of the about, I think it’s 3 billion currently in market cap, as we’re recording this in early March, of 2025 associated with crypto. But it uses also the least efficient algorithm of proof of work. And so I think people are going to use, I think people are going to use that because it has the largest market cap. On the other hand, the other four are much more interesting in the long term because they don’t have that proof of work, that proof of work consensus mechanism. And what that means is that you only do the calculation once, and you do it, you do it by a trusted party, as opposed to everybody calculating everything independently all the time, which is incredibly inefficient from a power and a cost perspective. Yeah,
Randy Johnston 13:30
so Brian, you know, just a couple other social comments on this right now, most crypto values seem to fluctuate in line with Bitcoin, and I think we’re going to have to see more decoupling of the values of the different cryptos for them to have no mean, more meaning. Your point and observation, by the way, I think is also spot on. This legitimacy so swift could get replaced with XRP, so this could be really traded as an asset. And, you know, there was a whole bunch of contention around SEC regulations. And I don’t know how to predict the future on that, but, but you and I have talked on on this as far back as six years ago, because you’ll remember in, you know, Trump presidency. One President Trump said, quote, Bitcoin is not money, and it is highly volatile, and based on thin air, that’s his direct quote from 2019 and he went on to say, we have only one real currency in the USA, and it’s stronger than ever. It’s the United States dollar. Well, things have changed since then, and you know, knowing that crypto is of high interest to a number of people involved with the administration this time, it is clear that this is finally going to get traction, is another way that I would think about this. And so knowing the transactions. Speeds and for again, for our listeners only, we encourage you to get to the video version of this. But Bitcoin takes about 10 minutes a block to process right now, and there’s a limitation of 21 million Bitcoins, and today you heard the physical number. The goal is to get to a million bitcoins in the strategic reserve, and that would be 5% of the 21 million Bitcoins out there. Now, XRP has about a three to five second processing time. That’s good enough to do a wire transfer, a swift transfer, if you would. And of course, Solana, very quick at 400 milliseconds, Cardona, much slower, at 20 seconds, and Ethereum at 12 to 15 seconds. So
Brian F. Tankersley, CPA.CITP, CGMA 15:46
realistically here Solana, Solana could replace your MasterCard, Visa, credit card networks pretty easily. And then you look at XRP, and that’s going to replace your swift and your wire transfers potentially. And it’s not going to, I’m saying it potentially could, those networks could be repurposed to do this. Now remember, these are these are networks, and these are applications that that run in the background, that do all the accounting on this, and so this is really a huge step into, into the void of automation in that when, if you put it, you know, unlike your bank, where, if you put in the wrong bank account, when you’re doing a transfer, you can recall that transaction when you put in a wrong account in here, if it goes out into the ether, into an account that doesn’t exist, well, guess what? It’s just gone, and it’s not never coming back. And so it’s this, you know, the thing to understand here is that, although there is some potential for interesting things to happen here, realistically, I think, because it’s so it’s it’s so not fault tolerant, it’s so intolerant of errors, I think realistically, the institutions are going to be are going to be connecting up with these things more as time goes on, and not as much direct individuals, just because, you know, the the cost of mistakes is just, is just unforgiving. And
Randy Johnston 17:17
Brian, I think our listeners both know about us, obviously appointed disclosure. I sit on the board of directors of a bank core processing system. Obviously, your wife is a commercial lender, and so, I mean, we have deep ties to banking. And this idea that Solana could replace credit cards, which, by the way, is absolutely possible, ACH entries, if you would, and XRP doing swift entries all of a sudden, the banking mechanisms and the controls around that are quite different now, just as kind of a point of reference, also Senator Cynthia Loomis, who is out of Wyoming, and you and I have talked about the Wyoming initiatives on cryptocurrency. They were in the
Brian F. Tankersley, CPA.CITP, CGMA 18:01
state chartered banks that were the first that could, that could hold assets and trust, yeah,
Randy Johnston 18:06
so, you know, basically, I want to call out that, you know, they are people that are involved with this, think that cryptocurrency is the way to go. And obviously Loomis has been promoting that in her own state. But I want to point out that right now, lawmakers in 24 US states have introduced led their own legislation at the state level to create their own Bitcoin stockpiles, and those measures have failed in four states, including Loomis, is own Wyoming. Now, again, I’m not trying to sound political on this, but you know, there is some sort of movement here that as accountants, you need to be quite aware of. And of course, we’re we haven’t even mentioned the reporting required on tax forms, which we have talked about in prior accounting technology labs. So this Know Your Customer, the value of the crypto, the transactions, the anonymity, if you will, that is behind these transactions. There’s so many factors that will begin coming out as all of this unfolds over the next little while. Now, again, we would encourage you to consider some of your own research on this or watching it. But again, quote from President Trump, for a skeptic, who said a few years ago that Bitcoin was, quote, seems like it’s a scam, has turned into, well, the crypto president now has turned in ways that can help both the crypto industry and could enrich himself and his family. Money. Obviously, you’ve got the Trump coin and so forth. So Brian, one other thing that I know we talked about before going to recording was just talking about the valuation of these different coins that are in the market. And you typically track that, and you have taught me this through the years. So could you speak to some of the current valuations that are out there as the day of this recording. And remember, you got to look at these every day, so
Brian F. Tankersley, CPA.CITP, CGMA 20:25
as of the day of and remember that these, one of the problems with using most of these that a strategic crypto Reserve could could could take care of, is we could effectively have the government making a market in these and the Fed or some other regulator, you know, making the prices more stable. The problem right now with most of these is that, you know, Bitcoin, the most stable, the price can still vary 20% in a in a single day. And that’s not that movement is not consistent with anything that’s a financial asset, okay, you just can’t, you can’t, you can’t bet on that and go there. The current, you know, this is, this website is coinmarketcap.com, it’s kind of the, I think of it as the Wall Street Journal, or the, you know, the CBS money line, or whatever, you know, the the money website that tracks crypto, the best global market is three, $3 trillion today. It’s all 14 bips from yesterday, and then it lists out the list out the the coins by market cap. And so what I want you to see is that on the day we’re doing this, where we have a roughly $3 trillion market cap associated with all of the all of the cryptocurrencies, notice that 1.7 5 trillion of that roughly, is Bitcoin. Okay, so bitcoin is still the 800 pound gorilla by a bunch. But notice then Ethereum, right after it, it has a market cap of all outstanding coins of 260, 6 million. Then XRP or ripple, despite their issues that they’ve had gone back, going back and forth with the SEC over the years, it still has a market cap of now $145 billion we then have tether. We have tether and we have USDC. Tether is number four. USDC is number seven. Those are not in the strategic crypto reserve, but those are what we call stable coins, and they have assets or derivatives backing them that cause them to have a a market cap, or, excuse me, a unit cost that is roughly equivalent to $1 very similar to a digital a digital money market fund. Now, I don’t know anything about B and B, so I can’t speak to it, but then we have Solana as the next one. That’s the one, again we mentioned that that could replace, could go through and actually be used to replace the
Randy Johnston 22:46
I guess we could use salon, credit cards, ACH
Brian F. Tankersley, CPA.CITP, CGMA 22:48
and credit cards. Yeah, yeah. We then have cordano in here, and then notice we didn’t make it all the way down to Dogecoin, and I’m sure Elon is very upset about that, but I’m sure that if Dogecoin had ended up in the strategic crypto reserve, Elon would have had all kinds of new problems to deal with. So anyway, even consider
Randy Johnston 23:06
that, Brian, so you’re spot on, because, you know, when you look at what I and again, I’m not trying to sound political on this, but the PayPal Mafia, you know, the the people that are involved in Paypal have done some good things and some bad things along the way. One other thing that you know, you’ve heard me say through the years, is follow the money. You know the movie, you know the reference, follow the money. But I think it’s also insightful to recognize in the past election cycle that Kamala Harris got 11 million from Chris Larson, the ripple co founder that Vinod Khosla gave a million to that same campaign. He’s the coin bass voice, I’ll get out coin base backer. You got Reid Hoffman, another coin base investor that put another quarter million in kamala’s campaign. And of course, President Trump received from Howard lutnic 6.4 million, who is a Bitcoin and tether advocate. Of course, you got the Winklevoss twins that run the Gemini exchange, that put in 2 million, and Jesse Powell, who does crack and who put in almost a million. And Bajan Tehran e stakes co founder put in almost a million, and JP Richardson of Exodus crypto wallet put in a million, and Gary CARDONE put in a million. And those are just reported contribution campaigns from the federal reporting. And I’m sure there’s more. But the thing is, I just say, follow the money. And you know, as you watch crypto, it’s going to be hard to follow the money because of the animated even if you’re using the blockchain explorers,
Brian F. Tankersley, CPA.CITP, CGMA 24:55
yeah. I mean, you can see, yeah. The problem is, you with all of these, you can see. See, you can see every transaction, but you don’t know who it is that that has that account. And so it’s a it’s it’s much more difficult. Well, in many ways, it’s easier for the for the feds, to figure out who’s doing things, as opposed to cash transactions. On the other hand, it’s harder because you don’t know who’s who. And effectively, there’s this, there’s this, I guess, laundering that can be done, where you, where you basically execute a whole bunch of sales to new wallets to effectively cleanse the Bitcoin. So it’s hard to see that it came from this event, yeah. And you know, a lot of interesting things going on here, yeah.
Randy Johnston 25:38
And we did talk about that too, because we also know that Cyprus was clearing an awful lot of crypto. And, you know, I have not been a fan of dark money at any political level, but we also know that the fair shake pack put in 200 million in these campaigns, that the future forward pack put in 400 million and several others put in over 300 million. So we know that each campaign put in, you know, a billion dollars plus this past cycle. And it turns out, it looks like the majority of the contributions were crypto, if you start adding the numbers up. So you know, again, I’m not trying to rehash or any of that stuff. It’s just very interesting maneuvers that happen for whatever reasons. But more important for this podcast is we know this will have an impact on your clients. We know it will have an impact on tax law in the very near future, we know that it’ll have an impact on audits in the not so distant future. We know it will impact family offices, and we know it will impact impact client accounting services. So those seem like core, core services to public practice, CPA firms.
Brian F. Tankersley, CPA.CITP, CGMA 27:04
But we also know that the existing market players and the financial services businesses, they’re going to fight like heck against against these new upstarts that that threatened to move their cheese. So we want to let you know that this move by the White House really grants the initial legitimacy to these things being used as an exchange of value in our in our system, even though they’ve been around for, you know, 1015, years, they’re just now getting to where you can use them without having to worry about, is this going to be seen as a money laundering transaction if I do this.
Randy Johnston 27:41
Yeah, good point, Brian, in fact, just on that item in other accounting Technology Labs we’ve talked about, you know, payment services. And I’ll just call out quick fee or CPA charge or forwardly, which we’ve discussed in the past. But when you recognize that we have two and a half to five points, but typically about three and a half points of credit card fees, you know, in the banking facilities right now for MasterCard and Visa and, of course, competitors of American Express and Discover and diners, you know that is a lot of friction in the payment systems. And if you look at wire fees for ACH or wire fees for swift those are also pretty heavy friction. So, you know, again, we’ve been watching it for, you know, over a decade. It obviously is pretty heavy news right now, and on the day we’re recording this, there’s going to be a lot more things that break over the next few weeks, but we wanted to give you a little bit of an update so you had a point of reference from somebody that you’re used to listening to on the topic. So Brian, closing thoughts. Closing
Brian F. Tankersley, CPA.CITP, CGMA 28:52
thoughts is that we stand at the precipice of very interesting time. You know, you and I both go into events that have been put on by Zoho. And you may remember when Prime Minister Modi, a few years ago, withdrew all paper currency notes that had a value greater than about $5 US, and then they moved everybody to push every to push the cash economy into the traditional banking system and require people to do wire transfers. And you know, in the cost over there, where you mentioned two and a half to 3% loading of fees over you know, associated with MasterCard, Visa over there money transfers through the banking network, 10 basis points, so 1/10 of 1% and so this crypto has the opportunity to potentially move us in that direction. And I think it’s going to, it’s going to be pretty epic to watch this battle that’s about to take place between the upstart crypto people in the PayPal Mafia against the traditional banking, financial service folks. And I don’t know about you, Randy, but I’m buying a case of popcorn at the Costco. We’re going to have to, we’re going to. Watch this. It’s going to be, it’s going to be a battle royale. And you know, who knows where it’s going to go, but I think you’re going to see, I think it’s going to be important for you to watch how the key congressional leaders come out on this, because they have to, especially, you know, the Congress has to run every two years for re election. So we need to, we need to keep our guys in this very interesting time we live in, though, a very
Randy Johnston 30:23
interesting time and friends. You know now why we wanted to do a quick update here on this new cryptocurrency Executive Order, which establishes a strategic reserve, because this is a big deal, I think, and we’ll see how it all plays out. But this is kind of the well, I guess I’ll call it continuing, but primary opening salvo. So we appreciate you listening in today. We’ll talk to you again soon in another technology accounting lab. Good day.
Brian F. Tankersley, CPA.CITP, CGMA 30:56
Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab from CPA practice advisor. Have a great week.
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