Tactic Tips
Nov 14, 2022

Setting Up A Best-in-Class Web3 Financial Ops Tech Stack

It’s never been easier for Web3 FinOps teams to build a modern back-office stack thanks to a range of software companies that help you get up and running quickly.

John Dempsey

It’s never been easier for FinOps teams to build a modern back-office stack thanks to a range of software companies that help teams to get up and running quickly.

Market leaders such as Stripe, Ramp, and Rippling save businesses time and money when getting incorporated, paying their bills, and managing benefits, payroll, expenses and more.

Companies building in Web3 have a few additional considerations such as:

  • Safe custody of digital assets
  • Price volatility
  • Maintaining auditable financials
  • Managing a tokenized cap table

Fortunately, there are a number of companies building in this space to directly address these needs.

Here’s a breakdown of some of the best back-office solutions for Web3 companies.

Exchange

Even the most crypto-forward companies conduct some of their business in traditional fiat currency, and need a reliable method to trade between different assets.

A cryptocurrency exchange is similar to a traditional bank where you can convert between fiat currency and cryptocurrency and execute trades between various currencies.

There are two types: 1) centralized exchanges that custody funds on behalf of their customers and create their own liquidity and 2) decentralized exchanges that act as automated market makers through smart contracts and do not directly custody funds.

Many businesses will choose to work with a centralized exchange with a good track record of safekeeping customer’s funds, low fees, and good customer service.

Recommended: Coinbase Pro, Gemini

How to Do Your Coinbase Pro Taxes? | Exchanges | ZenLedger


Custody

Crypto custody is the business of keeping digital assets secure. All transactions on blockchains are public, so custody providers don’t technically hold the funds, but instead secure the private keys that grant access to funds in the wallet.

There are a few options when it comes to custody:

  • Self-custody: manage your own private keys, which comes with greater risk
  • Exchange custody: all centralized exchanges also provide custodial services
  • Digital Asset managers: institutions that are regulated and licensed to offer crypto custody

Institutional custody providers specialize in storing funds as securely as possible, so are a smart choice for businesses with a lot of funds. The best providers are highly regulated, have passed a number of audits, and offer insurance.

Recommended: Anchorage, Fireblocks

Crypto Accounting

Blockchains are by definition a public ledger showing a history of all transactions. However, there isn’t a direct link from the public ledger to the general ledger where businesses manage their balance sheet.

Specialized software is needed to transform on-chain crypto activity (including DeFi & NFTs) into auditable records for accounting, treasury, and tax filings.

These providers need to seamlessly integrate with traditional accounting software like Quickbooks, be able to quickly handle large volumes of transactions, and be able to adapt to evolving regulatory guidelines.

“Tactic has completely changed our workflow, from a complicated tangle of manual tracking sheets, to a single source of truth for our activity and automated workflows helping us close our books quickly every month” says Jeff Caron, Head of Finance at Eco

Recommended: Tactic + Quickbooks

Equity Management

Many companies offer stock certificates which represent ownership in the company. While stocks are no longer issued on physical paper, software companies have emerged to handle the complicated task of recording cap table ownership and vesting schedules.

In Web3, many companies are opting to issue cryptocurrency tokens instead of stock which can then be traded on a typical exchange.

While there are benefits like lower setup costs and instant liquidity, Web3 companies will want to pick a provider that can help compliantly manage, track, and distribute these tokens.

“Tokens face the same problems late stage equity does. You have to track vesting, calculate taxes, get valuations and manage distributions. We’re the only platform where you can manage the token cap table from idea to launch and scale.” Yin Wu, Founder at Pulley.

Recommended: Pulley

Insurance

One of the problems facing Web3 companies is that they’re considered inherently more risky by traditional service providers. They often have to go through a longer onboarding process with banks and insurance providers who are less comfortable with the new asset class.

That’s created an opportunity for innovative  insurance providers who are better equipped to understand the needs of Web3 startups and provide tailored solutions.

“Vouch was founded to increase the number of startups that succeed. We designed new commercial policies from the ground up to specifically protect against risks unique to Web3 startups. It’s business insurance for innovators, now for Web3.” Jared Klee, Director of Web3 at Vouch. 

Recommended: Vouch

Summary

Picking the right partner can save Financial Ops teams countless hours and future headaches.

If you’d like an introduction to any of these companies, email us at support@tactic.com