10 challenges faced by CFOs dealing with Digital Assets
Nilos Team
July 26, 2023

In the last years, we’ve assisted to the surge of a new financial concept called “web3” finance. This refers, simply to the management of crypto flows in a business.

This emergence is due to a significant number of companies integrating crypto rails as part of their business models. What was used by a relatively small portion of businesses until last year is now a growing trend. In fact, according to DappRadar, we currently have 13,000 dapps and more than 13,500 NFT collections registered. This number doesn’t take into account businesses that gravitate around this ecosystem that have “some” operations in crypto to support native web3 companies.

Examples are: service SMBs getting paid in stable-coins, merchants & brands selling NFTs doing collaborations, freelancers/creators contributing to DAOs…

Funnily enough, when we mention web3 companies, we tend to think about DAOs & Protocols only. But in fact, the vast majority of “web3 finance” is handled by “web2 companies”.

Companies like Opensea raised equity rounds and entered into contracts mostly in fiat. They do not run on a governance token (yet).

That makes most of web3 companies: hybrid crypto/fiat companies.

As a result, their financial stack tends to be extremely fragmented, with a mix of crypto and fiat accounts, rails, and bridges to make this work.

This adaptation gives, obviously, a hard time to current CFOs.

Today, CFOs struggle with :

  1. Access to data and make sure it’s relevant
  2. Time spent on manual operations like payments, reconciliation & accounting
  3. Understanding of how to optimize costs from current infrastructure

The web2financial stack is already called “plummeting”, and crypto adds more complexity to it because of :

  • The nature of the asset — too volatile to consider it as a stable business currency
  • The regulatory framework — countries and jurisdictions don’t have the same ruling on the subject
  • The compliance framework — especially with banks.
  • The taxation framework — same as the regulatory.

So, let's look at the most common problems faced by CFOs dealing with crypto rails face, why they exist and some recommendations.


1. “I’m afraid that my bank account will get shut down because of crypto”

Traditional banks are in the business of minimizing risks to avoid sanctions. And crypto is unknown, therefore risky for almost all of the banking system.

This is due to anti-money laundering and counter-terrorism financing (AML and CFT) concerns.

  • Because we don't know who owns the wallets that initiate crypto transactions (there is no KYC taking place behind the scenes), there is no "real proof" (at least for banks) that the funds landing in your bank account are legitimate.
  • Since we don’t know who is the sender — we can’t be sure that he’s not laundering money using crypto therefore banks block the account that received this payment.

Of course, today, there are a lot of different techniques for understanding the activity of a crypto wallet based on its transaction history (a process known as "Know Your Transactions” or “KYT" investigation). Chainanalysis and Elliptic are two of the most reputable softwares in the domain.

2. “I can’t base my future decisions on data, because it’s impossible to have the full picture of my crypto activity”

This is because the Web3 financial stack is extremely fragmented.

  • Most operations are compartmented into dedicated new wallets for categorisations purposes. It’s not uncommon to hear that a decentralized application has between 50 and 200+ wallets to handle with a mix between hard, cold, custodian and non custodial solutions.
  • Companies tend to use multiple bank accounts to deposit funds or receive fiat payments, different crypto/fiat exchanges to on and off ramp and market makers/OTCs when dealing with bigger volumes.

Using many providers and deposit/processing accounts creates inefficiencies in the data collected, which makes it virtually impossible to build financial reports and understand the financial position of the company. This creates a huge pressure for all CFOs in the space.

3. “I spend hours dealing with manual operations like reconciliation and triggering payments”

This challenge is no different than what CFOs face with traditional rails. Matching payments made with transactions recorded for bookeeping is a painful process.

We have different types of reconciliation problems (some examples) :

  • Matching a payment made with a transaction recorded
  • Matching an invoice with a payment made

Crypto adds some twist to it (some examples) :

  • Matching crypto revenues to fiat transactions during an off ramp
  • Matching invoices in crypto with a payment converted in fiat

CFOs spend a lot of time manually dealing with these processes and need to switch from one account to another to recover the right information and trigger all their operations.

4. “I don’t know how to connect the dots between my fiat and my crypto accounts”

This point is also an effect of stack fragmentation.

Bank accounts and crypto wallets should be mirrors. They both have the function of receiving and sending funds. The only difference is they don’t use the same payment network.

Today, CFOs look for bridges between their fiat and crypto accounts to “jump” from one to the other and rebalance their treasury just like they would do with two different fiat currencies.

Use cases might include :

  • Deposit fiat into an IBAN account, convert it to crypto, then make crypto payouts  
  • Receive crypto into wallets on multiple chains and then streamlining payments to contractors in fiat
  • Deposit crypto into a wallet, convert it to fiat and make payments in fiat
  • Swap periodically from crypto to EUR to reduce exposure to volatility

5. “I spend a lot of money on fees ; i don’t even know how much”

Even today, it is difficult to have complete transparency on your banking operation costs because they operate like “black boxes."

In crypto, it’s different, we could have transparency, because the ledger is open, it’s just a matter of getting the data in the right format.

Nevertheless, with the current infrastructure, some fees might include:

  • Gas fees per network in their own native currency
  • FX spreads  
  • On / Off ramp fees
  • Swap fees
  • Credit card fees
  • PSP fees

6. “I don’t understand what is the difference between all the financial providers i meet — i feel they all are doing the same anyway”

Most of the CFOs feel that providers are providing the same service because businesses don’t have coherent feature sets. Some mix invoicing and payments, others might do accounting and custody.

Most platforms claim to be the one stop shop for web3 finances because they pile up features on top of features but don’t have a coherent product strategy.

So let’s break down the different types of providers by use cases instead of features:

  1. Wallets / banking / custody providers allow to receive payments & secure treasury assets
  2. Payment/payroll providers allow to trigger & automate payment operations  
  3. Exchanges, on ramps, off ramps, OTCs and market makers allow bridge between crypto and fiat operations
  4. Decentralized exchanges / protocols allow to do financial operations within the crypto ecosystem : swaps, lending, staking…
  5. Crypto/tax tools accounting tools to assess balances, calculate taxes and integrate into accounting softwares
  6. Invoicing tools to create crypto/fiat invoices
  7. Other tools might include : reporting & dash-boarding, spend management features…
In Web 2, the tooling stack is more evolved.

7. “Should i self custody, use a custodian, or both?”

This question is a trade off between perceived trust and security/efficiency.

On the one hand, centralized entities such as FTX that commit outrageous frauds cause many actors to reconsider trusting crypto custodians (even if a fraud is a fraud regardless of the payment network and custodians, that does not mean omnibus).

On the other side, just because you can own your funds doesn't mean you should. Owning the keys means having the responsibility to secure them.

The current wallet infrastructure today is composed of :

If you want a deep dive analysis on choosing a business wallet, you can read this great overview of Nakul Gupta.

How to be a successful Web3 CFO

8. “I can’t have granular access to work with my team securely”

Authentification of a service is one of the most important security pillars of fintech. CFOs work with administrators, financial operators, and accounting teams; they need to be able to share access to an account with granular access for them.

Examples of custom rules and policies :

  • At least 3 persons should validate a payments above 1m$+
  • Financial managers should have a “read only access” to the account
  • Office manager can trigger the payment and the CFO can sign and validate them

9. How do i provide the relevant information for accounting teams ?

Accounting and taxation are difficult in crypto for a number of reasons, including:

  1. Rules are not clear — for instance, how do we calculate the VAT per country if we can’t KYC the end user of a wallet?
  2. Data is spread across a number of wallets, bank accounts, PSP accounts across networks in a number of currencies
  3. Crypto is extremely volatile so there is a capital tax gain element to consider
  4. Accountants don’t know how to account for web3 operations like staking, lending or to use tools like Etherscan to read gas fees

CFOs that have built a custom infrastructure made of multiple tools tend to look for aggregators to re-patch this and create a unified view.

10. “I don’t know how to track who pays me and what i receive in my wallets”

Transactions in crypto have two origins : wallets or smart contracts. Since it’s difficult to maintain multiple wallets while having efficiencies around financial operations, CFOs tend to aggregate a number of payments in a single wallet.

This creates the recurrent question, “What is this transaction for?"

In order to make sense of the money that comes in, CFOs need to build categorization rules that label transactions dynamically as they enter wallets. just like the automatic labels on your emails.

Examples of categorization rules :

  • All transactions coming from smart contract address A are labelled with the name of the project
  • All transactions coming from wallet A is labeled with the name of the client
  • All NFT transactions coming from primary sales are automatically labelled as primary  

At Nilos, we’ve built an API to create customized rules to label any transactions coming in Nilos. You can find it here.


We spoke to 200 CEOs and CFOs over the past year. Here are some of our recommendations to overcome the challenges stated above:

  1. Keep at least 12 months of cash for ongoing operations
  2. Diversify the number of bank accounts ; have at least 3 of them.
  3. Find a crypto friendly bank to receive off ramp revenues
  4. Have a unique operational wallet to process incomes across chains and a mix of multisig/hardware/MPC wallets for your treasury.
  5. If you works with a custodian, don’t work with omnibus actors like exchanges but with segregated actors.
  6. Have 20% of your treasury in stable-coins for hot operations.
  7. Plan for KYT all incoming and outgoing transactions
  8. Make sure that if you’re using a traditional bank account, to process off ramp through a regulated entity
  9. Get a data team to create reports out of Etherscan
  10. Keep 20% of processes incomes for future VAT

Additional resources

Typologies Report Exposes Impact of Illicit Crypto Behavior
The public discussion around cryptoassets frequently mentions their use in cryptocurrency money laundering, terrorist…www.elliptic.co

Rise of the Next-Gen CFO: The Evolution of Finance's Role and Tech Stack
While finance as a business function has been around in some form or fashion since the dawn of company-building…sapphireventures.com

The CFO in Crisis Mode: Modern Times Call for New Tools | Andreessen Horowitz
In the current economic crisis, businesses have been forced to make difficult decisions around resource allocation and…a16z.com

How to be a successful Web3 CFO
Being the CFO of a crypto company can be one of the most challenging jobs - especially as many folks are transitioning…www.cryptechie.com

Defining the web3 stack
In this next segment of Building on web3, Edge & Node developer relations engineer Nader Dabit expands upon the web3…edgeandnode.com

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