INSIGHT

Crypto audit: What should your business expect? 

Javier Salinas • July 4, 2025

Services: Audit Industries: Blockchain & Digital Assets

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Navigating a crypto audit can feel daunting, but it’s a crucial step in building trust and transparency for your business. As digital assets become more mainstream, regulators and stakeholders expect clear, accurate reporting.  

A crypto audit examines your blockchain transactions, controls, and financial records—helping you stay compliant, manage risk, and demonstrate credibility in a space evolving faster than ever.  

What is a crypto audit? 

A crypto audit is a comprehensive security audit of your organization’s digital asset activities, controls, and records. It ensures your digital assets are accurately reported, using fair market value to reflect what those holdings would sell for on the open market at the audit date. This includes how you calculate and disclose capital gains from selling, trading, or spending crypto assets. 

It goes beyond traditional financial audits by validating not only your financial statements but also your blockchain networks and transactions, wallet ownership, and cryptocurrency security protocols.  

The goal is to confirm that your crypto holdings are accurately reported, securely managed, and compliant with evolving regulations. 

For example, if your business holds Bitcoin or other digital assets, a crypto audit will verify you actually control the wallets you report, ensure all cryptocurrency transactions are properly recorded, and assess how you value those assets on your balance sheet.  

Auditors may request you to sign a message from your wallet or perform a small test transaction to prove ownership, and they’ll review your internal controls to confirm your private keys are safeguarded. This process helps build trust with investors and regulators while identifying opportunities to strengthen your security and reporting. 

Four crypto audit types  

Like many things with this emerging technology, crypto audits are far from simple. There are four main types of crypto audits you’ll need to be prepared for. 

1. Financial audit 

A financial audit for a crypto business focuses on a systematic examination of your crypto infrastructure—verifying the ownership and valuation of digital assets, ensuring that all cryptocurrency transactions are accurately recorded and properly reflected in your financial statements.  

Auditors look for clear proof that you control the wallets listed on your balance sheet and that your revenue recognition aligns with accounting standards. 
 
Key red flag: Mismatched on-chain and off-chain records, such as discrepancies between blockchain data and your internal accounting, can raise concerns for auditors and regulators. 

2. Security audit 

A security audit examines how you manage and protect your private keys, as well as the access controls you have in place for digital assets. The goal is to confirm that only authorized personnel can access or move funds, and that your systems are resilient against internal and external threats. 
 
Key red flag: Relying on a single person for key access or approvals, a single-point signature authority, can leave your assets vulnerable to loss or fraud. 

3. Compliance audit 

A compliance audit evaluates your adherence to anti-money laundering (AML) regulations, sanctions screening (such as OFAC checks), and reporting requirements across jurisdictions. Auditors assess your processes for verifying counterparties and monitoring transactions for suspicious activity. 
 
Key red flag: Engaging in transactions with unverified counterparties or failing to screen for sanctioned addresses can expose your business to regulatory penalties and reputational risk. 

4. Smart contract audit 

A smart contract audit reviews the code and governance of your blockchain technology agreements to identify vulnerabilities, ensure proper upgrade mechanisms, and validate that contracts function as intended. This helps prevent exploits and operational disruptions. 
 
Key red flag: Lacking a tested disaster recovery plan for smart contracts or failing to address known code vulnerabilities can result in significant financial and operational losses if issues arise. 

When does a crypto audit happen? 

Most crypto audits follow a regular cadence, such as annually or at the close of a fiscal year, to align with financial reporting and compliance requirements.  

However, audits can also be triggered unexpectedly by regulatory changes, investor requests, or significant business events, including inquiries from tax authorities like the IRS. As tax enforcement around digital assets increases, businesses may face audits specifically to verify the accuracy of their crypto tax reporting. 

If your business experiences rapid growth, launches new digital asset products, or undergoes a change in leadership, you may face an unscheduled audit to address evolving risks and ensure transparency. 

It’s important to note that transparency will continue to rise in importance in this space as the Financial Accounting Standards Board’s fair value measurement requirements put it at the center stage of future audit standards. 

Top crypto audit triggers in 2025 

Certain activities increase the likelihood of a crypto audit, and tax-related issues are front and center. In 2025, key triggers include: 

• Holding more than 20% of crypto assets in non-custodial wallets can raise questions about security and ownership controls. 
• Using privacy coins or mixers, as these tools can obscure transaction histories and attract regulatory scrutiny. 
• Conducting 50 or more cryptocurrency transactions with unverified counterparties, which may signal compliance gaps or potential money laundering risks. 
• Reporting material discrepancies between your tax filings and financial statements, which often prompt deeper investigation by tax authorities. 

The AICPA’s 2025 guidance for stablecoin issuers exemplifies how standards continue to evolve, with expanded disclosure requirements for asset-backed tokens now in effect. 

Staying proactive about these triggers can help you prepare for and navigate a crypto audit with confidence. 

The crypto audit process: what to expect at every step 

A crypto audit follows a clear, structured process designed to help you demonstrate transparency, accuracy, and security. Here’s how it works: 

Planning and risk assessment 

Your audit begins with a collaborative planning session. Auditors work with you to understand your business model, map out your digital asset activities, and identify areas of higher risk—such as complex wallet structures, high cryptocurrency transaction volumes, or new product launches. This stage sets the audit’s scope and ensures the process is tailored to your unique operations. 

Data collection and documentation 

Next, you’ll be asked to provide detailed documentation. This includes wallet addresses, transaction histories, internal policies, and evidence of private key controls. You’ll need to provide detailed records of every sale, trade, or disposal of crypto, as each event may trigger a capital gain or loss that must be reported to the IRS. 

It’s the auditor’s responsibility to request access to your accounting records and any relevant smart contract code. Complete, organized records make this step smoother and help avoid delays. 

On-chain verification and testing 

Auditors use blockchain analysis tools to independently verify your reported balances and transaction activity. They confirm wallet ownership, often by requesting you to sign a message or conduct a test transaction and reconcile on-chain data with your internal records. For smart contracts, auditors review code for vulnerabilities and test for correct functionality. 

Internal control review 

Your internal processes are assessed to ensure that private keys are securely managed, access is appropriately restricted, and transaction approvals follow documented workflows. Auditors may request formal verification by observing key ceremonies or testing the effectiveness of your controls in real time. 

Reporting and recommendations 

Finally, you receive a detailed audit report. This document summarizes the audit scope, findings, and any identified risks or weaknesses. It also provides actionable recommendations to strengthen your controls and improve compliance. Sharing this report with stakeholders demonstrates your commitment to transparency and security and helps crypto investors maintain confidence. 

By understanding each stage of the crypto audit process, you can mitigate reputational damage and turn your audit into a valuable opportunity for growth and trust-building. 

How to prepare for your crypto audit 

Preparing for a crypto audit is a team effort that benefits from early action and clear coordination. Here’s how you can set your business up for success. 

Six months before your audit 

Start by bringing your finance and IT teams together to implement a transaction tagging system. This helps you clearly categorize activities, such as DeFi transactions or exchange trades, making your records easier to review.  

At the same time, work with your finance leaders to document how you’ll value illiquid tokens, ensuring your approach aligns with accounting standards and stands up to scrutiny. 

Three months before your audit 

Now’s the time to verify that you control every wallet listed on your balance sheet. Have your IT and finance teams run internal wallet verification drills, so you’re ready to prove ownership when asked.  

It’s also helpful to create a cross-department task force, including legal, technology, and finance, so everyone is aligned and can address questions quickly as they arise. 

One month before your audit 

As the audit approaches, tighten up permissions by freezing wallet access to capture a clear, historical snapshot of your holdings. Ask IT to generate automatic reconciliation reports across all blockchains your business uses. Finance should review these reports to spot and resolve any discrepancies before the audit begins. 

Preparing early and involving the right teams, including your tax professionals, can make your crypto audit smoother and more effective.  

For example: 

• When implementing a transaction tagging system or documenting your valuation methodology, ensure these practices also support accurate tax reporting.  
• When generating reconciliation reports, confirm that all taxable events are captured and match your tax filings. 

By involving the right people at each stage and following this timeline, you can approach your crypto audit with confidence and turn the process into an opportunity to strengthen your controls and build trust with your stakeholders. 

How to choose the right crypto audit partner 

Selecting the right audit partner is about more than technical skills—it’s about finding a team that understands your business, your technology, and your goals.  

Here’s what to look for as you evaluate your options.  

Deep blockchain understanding 

You want professionals who know blockchain technology and crypto assets inside and out. Look for a team with hands-on experience across protocols, consensus mechanisms, and the unique risks of DeFi, NFTs, and tokenized assets. 

Familiarity with your business model 

Every crypto business is different. Your audit team should understand the nuances of exchanges, wallets, DeFi platforms, and other digital asset operations, and be able to tailor their approach to your needs. 

Technical capabilities 

Effective audits require advanced blockchain analytics tools, cryptographic verification methods, and the ability to review smart contract code for vulnerabilities. Make sure your partner can deliver on all fronts. 

Regulatory awareness 

The regulatory landscape is evolving quickly. Choose a firm that stays current on global regulations, has experience with cross-border compliance, and can help you anticipate changes before they impact your business. 

Strong track record 

Ask about their history in the space. A strong audit partner will have a portfolio of successful projects and satisfied clients, demonstrating both reliability and trustworthiness. 

At BPM, our Blockchain and Digital Assets Group combines a deep understanding of digital assets with established audit methodologies. As one of the earlier CPA firms to commit to this industry, we bring over 11 years of experience supporting and advising clients in the crypto space. We work alongside you to navigate the complexities unique to your operations, always with a people-first approach that puts your success at the center. 

Get crypto audit-ready with BPM 

While crypto audits come with various challenges, a well-prepared crypto audit builds trust, ensures compliance, and strengthens your operations.  

If you’re ready to navigate the complexities of digital asset audits with confidence, reach out to BPM’s Blockchain and Digital Assets Group. We’re here to support your journey every step of the way.