Building the ideal FinOps stack for crypto companies
Each day, an increasing amount of companies receive funds in crypto or accept crypto payments. Virtual currencies are becoming a new component in managing business finances. In order to support them, web3 enthusiasts have been building the required and suited tooling.
Setting up an efficient financial operations stack is been a nightmare for crypto companies. Fortunately, it's now easier than ever to get your FinOps up and running across traditional currencies and cryptocurrencies.
On top of what "legacy companies" require, Web3 organizations and DAO's have additional expectations:
- Safe custody of digital assets
- Centralized tracking of all dAssets
- Exchanging between digital assets and USD
- Managing corporate expenses with Debit Cards
- Maintaining auditable financials
In the past, the financial stack of web3 organizations consisted of connecting 5-6 independent blocks in order to operate. That resulted in scattered data and difficulty to centralize information from all tools. Additionally, they were mutually dependent, needed to be operational at all times.
Fortunately, in the midst of the 2022 crypto winter, companies in the space have been building the necessary infrastructure to support the wants and needs that are specific to organizations that hold crypto treasury or generate revenue in crypto.
Here's a list of the best financial software tools we chose in the web3 space.
Exchange & Custody
Even today, the most crypto-advanced companies conduct some of their business in fiat currencies and need a reliable means of exchange between both forms of currency.
The most common way of doing that is by dealing with centralized exchanges such as Coinbase — however, the fall of FTX is having users question the security of their funds in centralized wallets.
Centralized exchanges have been great for retail users. However, for businesses, setting up a Coinbase Pro wallet can take up to 3 months. Business owners often don't have the time for that type of setup.
Multis solves the issue with 3 pillars:
- A self-custodial Safe wallet for your digital currency
- A crypto friendly bank account
- An in-app exchange to convert seamlessly and instantly between both
Blockchains are by definition a public ledger that shows the history of all transactions. However, there is no direct link between the public ledger of blockchain and the balance sheet of crypto companies — an accountant's nightmare.
In the past few years, the web3 space expressed the need for a software that translates on-chain crypto activity to auditable records and manageable data for accounting and tax-related purposes.
Multis solves the issue in these 5 ways:
- Detailed transaction log with necessary metadata
- Categorization rules to automate payment classification
- Connecting with external bank accounts with Plaid
- Tracking of other payments wallets
- Quickbooks integration
People working in web3 companies have long contemplated the alternative of being paid in cryptocurrencies. That adds on to the fact that instant payroll payments have become the standard in the industry.
3 options can be considered:
- Crypto payroll with mass payout w/ Multis (save up to 60% on gas fees)
- Deel w/ Multis Corporate Card
- ACH transfer pull with HR softwares
Equity investment has always been a bumpy road to navigate. Historically a huge pile of paperwork, new software solutions have made it easier to record cap table ownership and vesting schedules.
In web3, many companies choose to issue cryptocurrency tokens instead of stocks, which can then be traded on a typical exchange.
Regardless of the choice of currency issuance, web3 companies need a provider to compliantly manage and distribute the tokens/stocks.
4 options can be considered:
- Pulley for a smart cap table
- Easop for equity management with international teams
- Liquifi for a cap table with tax compliant token vesting
- Fairmint to include your community in your cap table
Crypto companies are considered as inherently more risky by legacy service providers. With banks, the onboarding processes are longer, and insurance brokers aren't yet very comfortable with dealing with this new asset class.
The discomfort of traditional insurance providers with web3 businesses has been an opportunity for new providers to design new commercial policies and be able to cater to tailored solutions that support the risk of such businesses.
Recommended — Vouch
In a nutshell, building a financial operations stack for web3 companies has never been so easy. By using Multis and plugging in 1-2 other blocks, you can have a fully functional and smart streamlining of your operations.
Feel free to contact us for any information on Multis or for any introduction to the companies mentioned.