What is AEM  Journaler and how well does it integrate with Quickbooks and other often-used accounting software?

We have had accountants of various types since time immemorial.   I am sure that in Ancient Greece, they had accountants quantifying volumes of wine, in Persia, there were accountants quantifying amounts of gold, and many other examples.  For years, the biggest changes have been to write down those changes, and then to install a standard protocol for writing down those transactions.   Centuries have come and gone and nothing else has changed very much.   But, recently computers have been introduced to accounting, and the game changed.    As cryptocurrency is invited to the party, it makes sense that these newly-introduced computers would be involved in dealing with the subsequent challenges of cryptocurrencies.

And so they are.   One of the newest pieces of software (so new, the writing of this entry has proven difficult) is called AEM Journaler, and it aims to simplify the reporting of transactions using cryptocurrencies.  This is not a simple thing, as to be helpful, Journaler has to integrate seamlessly with Quickbooks and other accounting software using fiat currencies (Quickbooks certified it in 2023.)    AEM software is special because, along with the traditional accounting functionalities, there is an associated wallet that will allow for storage of dozens of different cryptocurrencies.

The words of the CEO. Jakub Sawczuk, are interesting because they reveal the mission of AEM Algorithm. “At AEM Algorithm, we’re pioneering the future of crypto accounting by bridging the gap between traditional financial systems and the blockchain era.  We aim to empower businesses worldwide with accessible, efficient and secure solutions for managing crypto assets and push the boundaries to deliver something unique.”  Unique indeed; at some future date, AEM is looking into the floatation of its own token.   The objective appears to be their attempt to offer a cryptocurrency exchange of some sort.   Learning more about this software and its ilk, seems important as their impact spreads worldwide from Australian HQ to facilities in Hong Kong and China.

 Why is this so important?

This type of software is so important because cryptocurrency is so volatile.   We have already seen it as being explosively price volatile, even the definition of what cryptocurrency is,well squishy.  Per the IRS, cryptocurrencies are property on which you report a loss or gain on disposition.  But, for the larger from of accounting (governed by GAAP as espoused by the FASB) the question is still a much debated one.  They are not cash or cash equivalents due to their price volatility; they are not financial instruments  or securities because they are not an ownership interest, and they are not inventory because they lack physical substance.   They are intangible assets of indeterminate life, that need to be tested for impairment annually.  (To me, this is interesting; I work for the IRS and I am a  CPA, so when I see daylight between definitions, I see potential problems and potential solutions.)

The Verdict

Right now, AEM seems to have a very good product.   It seems to work well with Quickbooks and other systems.  I read that they seem interested in providing their own exchange too, and they are going to float their own token to pay for the project.  Unfortunately, ala FTX, 3-Arrows Capital and others, I smell a problem.  As you have an exchange, special product and a cryptocurrency of your own, I see the makings of a very tempting revisit of FTX.  I hope I am wrong, but we’ve seen this pattern a minimum of 5 times now, so, it might take some divine intervention to prevent.  Might that be the reason that all of our real money says, “In God we Trust.”?

 

REFERENCES:

Preparing business accounting for the crypto era with advanced tools (cointelegraph.com)

AEM Algorithm unveils Journaler as a global solution for reporting crypto (cointelegraph.com)

Accounting for Cryptocurrency Purchases, Sales and Receipts | BDO

Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.