EY buys cryptocurrency tech from startup Elevated Consciousness

06 August 2018 Consulting.us

Accounting and consulting firm EY has purchased the Andy Crypto-Asset Accounting and Tax (CAAT) tool from a Silicon Valley startup. CAAT links with cryptocurrency exchanges and wallets, and gives accountants greater visibility into crypto transactions and inventory.

Once only associated with black market transactions and less-traceable forms of payment, cryptocurrencies like bitcoin are gaining more widespread acceptance across the world. Many prominent economists – like Nobel laureates Joseph Stiglitz, James Heckman, and Angus Deaton – however, are skeptical of the currency, seeing it as a dangerous economic bubble or as simply a better way to conduct less-traceable criminal transactions.

Nonetheless, businesses are preparing for a future with more people using cryptocurrencies. An elite Montessori school in NYC, for example, has already started accepting bitcoin for tuition. Big businesses like Microsoft, Shopify, Paypal, and Subway also accept the cryptocurrency as payment – though obviously still pegged to its USD equivalent value.

As such, professional services firms like EY are preparing to service expanding client needs with cryptocurrency and blockchain solutions. In April, EY launched its Blockchain Analyzer – a suite of audit tools which facilitate the in-depth review of cryptocurrency business transaction. The analyzer helps audit teams gather transaction data from multiple blockchain ledgers, and then perform analysis of the data.

Now, EY has purchased from San Francisco startup Elevated Consciousness certain tech assets and patents, including the Andy Crypto-Asset Accounting and Tax (CAAT) tool. The tool allows for better visibility into cryptocurrency transactions and inventory – pulling out the anonymity and less-traceability that libertarians, criminals, and privacy-minded techies love about the currency.EY buys cryptocurrency tech from startup Elevated ConsciousnessLeaders at EY are bullish on the use of cryptocurrencies in the legitimate business world. It’s just another ‘wave of the future’ type thing like the raft of industry 4.0 technologies that will rapidly take us away from the world we know to one of automation, AI, augmented reality, and the like. And if the market wants cryptocurrency solutions, EY will give it to them. Economists like Angus Deaton, meanwhile, can question whether the world needs ‘another speculative asset.’

“Cryptocurrencies and blockchain are transformational forces with a strong potential to fundamentally change the way business is done,” commented Kate Barton, EY Global Vice Chair – Tax Services. “CAAT positions us as a leader in serving a variety of companies adopting crypto-assets in an evolving regulatory environment.”

Michael Meisler, Ernst & Young LLP Tax partner and Tax Blockchain leader, added, “We continue to see an increase in consensus among the asset management community that crypto-assets are a viable asset class from an investment standpoint.”

The CAAT tool was acquired by the EY Americas Tax Innovations Foundry – a group tasked with building new businesses that give the broader company innovative tax solutions to provide to their clients. The tool’s purchase is part of EY’s plan to accelerate their growing portfolio of blockchain and cryptocurrency solutions – with tax-mindedness built-in. CAAT will be added into the EY Blockchain Analyzer portfolio.

The Andy Crypto-Asset Accounting and Tax tool was created by Elevated Consciousness CEO VJ Anma and a team of Silicon Valley entrepreneurs. Anma drew on his experience as a cryptocurrency fund manager to develop the innovative application.

“Numerous firms are interested in technology around cryptocurrencies like CAAT, but the unparalleled entrepreneurial know-how and experience that the Foundry offers is what attracted us to the EY organization,” said Anma. “The organization is positioned to be a leader in the blockchain and crypto-asset space. My team and I are excited to support EY as the technology is taken to the next level.”

Consultancies are especially enthusiastic about using the underlying blockchain digital ledger technology of bitcoin to create secure and easier-to-use accounting solutions. Recently, EY partnered with Microsoft to launch a blockchain royalties management solution. EY also recently teamed up with Towers Watson to introduce the world’s first marine insurance blockchain platform


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Payments market projected to see 6.6% annual growth to 2027

17 April 2019 Consulting.us

Bank payment systems are big revenue generators for incumbent banks, and growth in the segment is projected to continue at a rapid 6.6% annual increase, from $1.3 trillion in 2018 to $2.4 trillion in 2027. Developing markets are set to see the fastest growth, increasing their total share from 52% to 61% in the same period.

The payments segment is set to see strong growth in the coming decades, particularly in developing countries. The long-time control of banking incumbents over the segment, however, faces various threats from the rise of fintechs leveraging a range of technological innovations.

To understand the changing market conditions, as well as the possible impact of new entrants, Boston Consulting Group (BCG) has released its “Global Payments 2018” report.Payments revenue is expected to grow by 1.1 trillion to 2027Payment revenue has seen a number of years of solid growth, particularly in line with developing global economies. Compound annual growth rate (CAGR) globally stood at 6.8% between 2010 and 2017, increasing from $805 billion to $1.27 trillion. Mature markets have been relatively stable, with growth of around $100 billion noted during the period, resulting in around $616 billion in revenue in 2017. Developing economies, meanwhile, saw total revenue more than double, from $268 billion to $657 billion.

While the disparity in growth between developing and mature economies is currently stark, the firm’s projections for the future will see developing markets up their growth while mature market growth slows, at 8.3% and 4.4% CAGR, respectively, between 2018 and 2027. Developing market revenue shares are overall set to continue to eat into mature market shares. The shift will see the 2027 mature market represent 39% of total revenues, compared to a 48% share 2018.Primary income set to close gap on secondary income in mature marketsThe study also examined the difference between primary and secondary revenue sources, and their respective growth rates. Primary sources represent transaction fees that come with making payments, while secondary sources represent account fee costs and related non-transaction costs. The study revealed a shift toward increased income from primary sources in mature markets, with the share between primary and secondary sources shifting from 43% and 57% in 2017, to 57% and 43% by 2027. In developing markets, however, secondary sources are and will continue to be the main source of revenue growth, at 27% (primary) and 73% (secondary) by 2027, with only a 4% increase in income from primary sources over the same period.Retail payments revenue is expected to growRetail growth is projected to represent the more lucrative growth market for payment revenues, with 7% growth between 2017 and 2027. Credit card revenue will see the strongest relative growth, up almost $462 billion, followed by account revenue and debit card revenue. The retail market, meanwhile, is set to top $1.85 trillion by 2027, with the wholesale market set to see growth of around 6%. Account revenue will see the strongest absolute growth, while credit card and debit card revenue growth is set to outpace the market as a whole, with around 7% growth during the period.

The firm notes, however, that customer sentiment is changing. Fintechs are sometimes able to provide more efficient and better tailored services – with uncertain outcomes for some incumbents. “In both the retail and wholesale payments business, customers are becoming impatient with clumsy interactions and inefficiencies,” Mohammed Badi, leader of the firm’s global payments and transaction banking segment, and the report's coauthor, said. “Consumers, treasurers, and merchants are looking for automated, integrated buying journeys and tailored service. They are being conditioned by their buying experiences in other industries. Banks, in order to stay relevant, must respond faster and more strategically to the altered payments environment by focusing on the pain points that matter most across the overall customer journey.”