5 blockchain trends to watch in 2020

As 2019 rapidly wraps up and 2020 looms on the horizon, it seems an appropriate time to take a step back and reflect on the many changes that have occurred in the blockchain and cryptoasset spaces.

There certainly have been a lot of headlines and market coverage during the year, so trying to go back and document every single story is nearly impossible. Instead, the Accounting Working Group of the Wall Street Blockchain Alliance polled our members and put together an overview of some 2019 highlights, as well as some big picture trends and stories set to drive blockchain technology forward through 2020 and beyond. No listing of such a fast-moving space can ever be exhaustive, but should instead serve as a starting point for further conversations and debates.

Stablecoins are officially part of the mainstream conversation.

Libra may be proceeding more slowly than initially thought, and has actually been beaten to market by Facebook Pay, which does not require crypto at all — but that misses the larger point. Consumers, merchants and investors around the globe continue to look for alternative currencies or investments without the volatility and uncertainty still commonly associated with traditional decentralized cryptocurrencies. Stablecoins are being developed by the private sector as well as national governments, including but not limited to Estonia, Dubai, Russia, Sweden and Japan, and were officially brought under the umbrella of virtual currencies with the release of IRS Revenue Ruling 2019-24 and FAQs in October of 2019. An additional benefit of broader development may be that this increased adoption nudges accounting standard-setters to issue much needed guidance linked to crypto accounting.

2020 will be the year of regulatory clarification and broader enterprise adoption.

With the IRS issuing additional clarification, following up on increased enforcement efforts during the summer of 2019, it is clear that the Service has crypto on its agenda. Outside of these updates, however, the regulatory landscape looks like it will continue to be muddled going forward. With different interpretations and pronouncements being issued by different U.S. regulators (not to mention international legislators and regulators), practitioners will need to continuously monitor this fast moving aspect of the blockchain space. As painful as it might be for the organizations involved, any cases that are brought to court and resolved may be the most concrete way for other market actors to obtain some level of clarification and certainty in the interim. The importance of regulation cannot be overstated, with the CFTC, SEC, Treasury and numerous other law enforcement agencies looking to establish and affirm their respective positions with regard to regulatory and enforcement oversight.

Enterprise blockchain will continue to mature and develop, but not in the ways everyone might think.

Well-known examples such as the work underway at companies like Walmart, IBM, JP Morgan, Facebook and many others will continue to progress, but there is a bigger picture coming into focus. The People’s Bank of China, China's central bank, recently announced the development of a centrally managed crypto-yuan, and that was before the very public embrace and endorsement of blockchain as a strategically important technology for the foreseeable future. Christine Lagarde, the current head of the European Central Bank (and former International Monetary Fund head), announced that the EU had to look closely at developing a zone-wide blockchain and cryptoasset platform. It remains to be seen how these and other projects will ultimately develop, but the trend is unmistakable. With such large-scale efforts underway, the need for increased accounting and financial market clarification and frameworks will become even more important.

Expertise in blockchain and cryptoassets will begin to become a differentiator.

Until recently there remained a bit of ambiguity and uncertainty as to exactly how technologies like blockchain and cryptoassets could be leveraged for enterprise purposes. Scalability, interoperability and technical complexity represented substantial headwinds for organizations seeking to implement blockchain solutions and accounting firms looking to offer advisory services. That is changing quickly. As the rollout of permissioned and consortium blockchains continues to accelerate, the need for accountants and advisors who possess the skills and capacity to advise and assist with blockchain will also accelerate. Firms and practitioners with such knowledge and experience will pull ahead of the pack, and will be able to differentiate themselves and their firms and price these services accordingly.

Blockchain and crypto will become must-haves for the profession.

Whether it takes the form of advising clients on specific blockchain implementation questions, working through the accounting implications of various cryptoassets, or trying to make sense of the growing thicket of regulations, accounting and tax professionals will need to get up to speed on what exactly is happening in the space. In order for additional service lines to ever become reality, practitioners must be proactive and actively engage in the learning process. If not, there is the real possibility that non-accountants will encroach on these valuable service offerings. The technology itself may be new, but the importance of integrating technology into current offerings is something accountants have a long track record of successfully doing. A core part of these efforts is having access to objective educational and informative materials, such as those produced by the WSBA, CPA.com and the AICPA.

No matter what specific trends come to the forefront, predicting the future is invariably a tricky business. That said, it seems clear that far from fading away, blockchain adoption and implementation will continue to accelerate and drive change across different industry verticals. In such a fast-moving, multifaceted space, it is imperative for the profession to keep up to date, be engaged in as many angles of this conversation as possible, and examine these and other issues in an objective, level-headed manner. We at the Wall Street Blockchain Alliance welcome participation, feedback and engagement from all members of accounting and financial services community to further enrich these and other conversations into 2020.

Sean Stein Smith is a professor at the City University of New York – Lehman College. He also is the chairperson of the NJCPA's Emerging Technologies Interest Group (#NJCPATech). He serves on the Advisory Board of the Wall Street Blockchain Alliance, where he co-chairs the Accounting Work Group. Sean is on the Advisory Board of Gilded, a TechStars ’19 company. He is also a Visiting Research Fellow at the American Institute of Economic Research.

Ron Quaranta currently serves as chairman and CEO of the Wall Street Blockchain Alliance, a nonprofit trade association promoting the comprehensive adoption of blockchain technology and cryptoassets across global financial markets. He possesses almost three decades of experience in the global financial services and technology industries. He was named one of the Top 100 Most Influential People in accounting by Accounting Today in 2018.

Peter Rehm is a CPA who has spent the past three years developing an in-depth knowledge of blockchain technologies and cryptocurrencies while working as the founder and board member of a number of blockchain education and consulting entities in Atlanta. He has prepared and presented blockchain seminars and podcasts for the AICPA, at local CPA firms, and he interacts with local and nationally known blockchain professionals. His career business background has been as a financial and systems consultant to large banking companies.