Almost all cryptocurrencies run on blockchain. This infrastructure is the basis of various advantages such as security and decentralization offered by cryptocurrencies. Therefore, it is necessary to examine the development of the cryptocurrency market, especially Bitcoin, not only on price but also in regard to the infrastructure it has. Because the most important feature of an investment instrument is the reliability of the investment. Therefore, trust in cryptocurrencies is directly proportional to the trust in blockchain. The less question marks about the security of blockchain technology around the world remain and the more widespread this infrastructure becomes, the more positive cryptocurrencies are expected to be affected.
In order for blockchain technology to be accepted internationally and in various fields and to reach a significant financial size, it is key to integrate it with commercial and public institutions. 4 major auditing companies; Ernst & Young, PwC, Deloitte and KPMG, can be considered as an ideal distribution network in the sense that this integration reaches out to almost every organization. For this reason, this article was written to explain the role of 4 major audit companies regarding the development of cryptocurrencies.
In articles below, it can be seen what kind of services these companies provide in which fields.
KPMG offers blockchain and cryptocurrency services individually. Customers who are interested in blockchain technology can get support from KPMG at every step of the integration process of this technology. KPMG first determines whether the client’s company is in need of blockchain. However, companies can also get support from KPMG on issues such as installation, selecting algorithm and operation of the system. Currently, KPMG has a supply chain system set up on blockchain for the pharmaceutical industry.
Regarding the field of cryptocurrency, KPMG informs its customers about the risks of cryptocurrencies. It can be said that the company has a more skeptical approach in this sense. Security levels of cryptocurrencies other than Bitcoin can be controversial despite the blockchain system. KPMG’s most recent breakthrough in this field is the system called Chain Fusion. This product, launched in 2020, gathers customers’ cryptocurrency and digital assets under a single roof. Customers can integrate their cryptocurrency wallets and track their transactions with Chain Fusion, which also offers custody services. In this way, KPMG combines wallets and cryptocurrencies with their own blockchain networks under one roof.
KPMG executive Sam Wyner announced that they have a high demand from US customers, especially after the cryptocurrency-friendly regulations implemented by the US Banking Authority OCC. Sam Wyner also stated that he expects the interest in cryptocurrencies to increase in both individual and corporate level as the CBDC (Central Bank Digital Currency) trend becomes widespread.
E&Y is the company with the most comprehensive blockchain solutions among the 4 major auditing companies. The company’s use of the Ethereum public blockchain network is a serious feature that distinct E&Y from the rest. The company provides services through 6 main services.
While cryptocurrencies are more and more the subject of a new debate in the US on a daily basis, there is no clear legal infrastructure in the nation yet still. The issue of taxation of cryptocurrencies, which are changing day by day, is one of the most important issues of US users.
Cryptoprep offers users the opportunity to manage their cryptocurrencies without having to follow current taxes and regulations. In this system, users integrate their wallet balances and transaction history into the system. The system automatically completes the necessary tax forms and required transactions, allowing users to easily use their cryptocurrencies.
One of the most common area of use of blockchain is logistics. Managing supply chains is very difficult, especially due to the increasing complexity of international trade. Opschain organizes users’ supply chains with smart contracts. It also ensures compliance with the legal system of different countries. Users can create tokens on Opschain for their own logistic services and create a secure trading infrastructure by exchanging these tokens with other parties of the supply chain.
Tesseract provides services in the field of transportation mobilization. Users can purchase, sell and rent vehicles through Tesseract and become partners to their vehicle fleets. The system ensures the security by transferring tokens to its users in trading and leasing transactions. At the same time, users can get a share from revenues and get passive income as a partner from fleets on the system. In this system, all transactions are supported by smart contracts.
Insurwave is an insurance and risk management service. It serves especially in the field of maritime trade. Since maritime trade is an area subject to international and many different laws, it is a very complex area in matters such as insurance of trade, reimbursement under insurance, and risk management of companies. Users can directly adapt to different legal regulations and applications in other fields via insurwave. With distributed ledger technology and smart contracts, users get real-time data. In this way, faster decisions can be made by providing faster risk management on current commercial flow.
5. Blockchain Analyzer and Token Review
Users utilize this system for analysis of any blockchain network and token. Since transactions on the blockchain network are permanent, the system analyzes previous transactions and checks the security of written codes. According to these results, the network is tested with simulations including different scenarios and the suitability of the analyzed network and token is determined regarding the user’s own business model.
6. Explorer Visualizer
This service provides services for monitoring and modeling transactions in blockchain networks. With analyzing the transactions on blockchain, anomalies and malicious transactions on network are modeled. Users use this service mainly to examine network security.
PwC stands out in the field of cryptocurrency and blockchain technology regarding data collection and reporting. PwC regularly conducts surveys and publishes various reports on both the use of blockchain technology and the operation of cryptocurrency market. These reports provide reliable information about how healthy the market is functioning, trends and market direction.
In the latest report of PwC, blockchain technology is expected to contribute 1.76 trillion USD to the global economy by 2030, while it is predicted to create employment for 40 million people. Blockchain is expected to develop in 5 main fields. These fields can be listed as follows:
The countries that will benefit most from blockchain technology in the next 10 years are expected to be China, USA and Germany, respectively.
Again, PwC’s survey with global companies reveals that companies have passed the stage of recognizing blockchain technology and are in the process of implementing integrated business models with it. In addition to all reports and surveys, PwC’s web site offers educational content in the field of blockchain and cryptocurrency.
PwC also offers an audit service called Halo, apart from surveys and reporting. Using the Halo service, users can safely protect the private and public keys of their cryptocurrency wallets, and receive useful information about the security of the network by getting audit service related to blockchain network used by the cryptocurrency. More importantly, users can insure their cryptocurrency on Halo. Halo currently serves for Bitcoin, Bitcoin Cash, Bitcoin Gold, Litecoin, Ethereum, Ethereum Classic, Tezos, various ERC20 tokens and XRP.
Deloitte provides consultancy services to its customers on blockchain and cryptocurrencies, similar to the other three audit firms mentioned above, and provides support from the start of the process until the end regarding the integration of blockchain technology’s suitability for the business model of its customers. Additionally, if it will provide a more effective solution during this process, it also serves to create tokens in accordance with the business model, and ensures that customers have up-to-date infrastructures regarding the ever-changing taxes and regulations of cryptocurrencies.
Deloitte currently provides consultancy services on blockchain and cryptocurrencies in the fields of finance, entertainment, health, real estate, manufacturing, transportation and public services internationally.
Deloitte’s solutions may be listed in many areas and topics:
It is a smart rental system. This blockchain-based system creates a market environment that brings together mediators, buyers and sellers.
It is a blockchain-based solution that brings together banks and insurance companies. The system contributes to the functionality of the process by simplifying the complex insurance structure thanks to smart contracts.
It ensures that the legal application and licensing processes of commercial institutions are carried out on a single platform and that the relevant public institution can follow the process from a single source.
This payment system, which is in prototype stage, is tested on the XRP and XLM cryptocurrency networks. With this system, international money transfers are planned to be executed just with the phone or e-mail information of the receiving party without any intermediaries.
This solution, which was created for the use of financial services, ensures that the personal information of the customers is securely saved without the need to be provided each time to the entity.
It is an automatic system that alerts the investor by detecting that an asset has been financed more than once (subject to mortgage).
It is examined whether the blockchain network has an abnormal activity. In this way, by detecting malicious transactions on the network, measures might be taken.
This is established for communication between the insurance company and the insured. This solution is essentially a demand management service. It enables the insurer to effectively meet collective demands and distribute resources effectively in collectively affected events such as floods and earthquakes.
It enables the insurer to track small-scale ensuring transactions and to follow effective KYC methods.
It is a banking solution that covers the entire loan process related to various loan types with blockchain based distributed ledger technology and smart contracts in cooperation with Deloitte and SAP.
It is a solution related to MiFID regulations developed by the European Union with the goal of increasing transparency and setting standards in financial markets. With this service, a documentation mechanism has been developed that can be shared with all relevant public institutions using blockchain technology. In this way, all arrangements can be managed on a single platform.
This platform enables banking entities to create daily liquidity reports as proof that they have not been altered in any way. While ensuring the security of the data on the platform, a transparent and auditable infrastructure is provided for both the banking entity and regulatory institutions.
Allows reinsurance* transactions to be carried out with blockchain. In this way, a sense of trust is created between the parties and the complexity caused by the nature of the transaction is minimized.
* A reinsurance is when an insurance company insures its obligations with another insurance company.
It provides secure data to the manufacturer by ensuring that products are tracked and traced from the very start until the end of the production process.
It is a platform that provides solutions to manage domestic and international trade related financing activities between multiple parties such as importers and exporters, financiers, insurers, export credit agencies and other service providers.
In international trade, loans based on a written letter of guarantee given to the bank are called letter of credit. Although this process is frequently used in international trade, it is not completely digital. Deloitte provides simplification of letter of credit transactions through blockchain technology. It is stated by Deloitte that, thanks to this solution, letter of credit transactions have been observed to be accelerated by 60% — 90%.
Due to the constantly evolving regulations, the amount of data that financial institutions must report for their transactions is gradually increasing and changing. Transaction Reporting aims to facilitate the reporting of data. It can be used in all areas of the process, from uploading data to the platform to delivering it to the competent authority. In this way, reporting becomes effective, costs decrease and gain transparency.
Various blockchain solutions offered by the audit companies listed above show a striking picture of how efficient and how wide this infrastructure has the potential to reach. The aforementioned audit companies have been offering blockchain solutions to their customers for at least 2–3 years. Nowadays, with the development of legal infrastructure, corporate firms that invest more in the field of cryptocurrency are actually getting used to the infrastructure used by cryptocurrencies for some time due to audit companies. Therefore; the demands of institutional investors for cryptocurrency are also originating from the fact that blockchain technology has started to be used in a wide variety of areas due to the increased trust, besides the financial benefit to be obtained from this market.
Anyone who has been following the market for at least 1–2 years will notice that concerns about cryptocurrencies are gradually changing. Whether cryptocurrencies are safe or whether this system can be interpreted as Ponzi Scheme are no longer common questions today. Current discussions are mostly seen as useful criticisms about the various financial solutions offered by cryptocurrencies. Therefore, it can be said that audit companies have a very important role in this transformation.
Prepared by Berkay Aybey
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