€60,000 to Rebuild Three Years of Crypto Books — and Why a Cheap ‘Discovery Phase’ Does Not Exist

(real client enquiry)

Dear CYAUSE,

Thank you for the proposal. At this stage I am not in a position to approve the €60,000 quotation. Before committing to a project of this size, I need a clearer definition of the scope, the deliverables and the pricing assumptions.

My request was for a separately priced, fixed-fee or capped-fee Discovery phase, followed by a proposal for the full historical reconstruction once the actual wallet inventory, the transaction population and the data gaps had been assessed. The current proposal appears to combine the two stages, while the volume assessment and the final deliverables would only be established after engagement.

By way of background: the company is a Cyprus entity that holds its own corporate digital assets in long-term self-custody, across hot wallets and hardware cold storage. The period that needs rebuilding runs from September 2024 through to an agreed current cut-off. We are not commissioning a customer-asset custody or exchange-solvency engagement.

Could you please clarify the following.

1. Discovery versus full reconstruction. Does €60,000 cover the complete historical reconstruction of all transactions within the agreed scope, or the listed verification, screening and sample-based work only? Please provide a separately priced Discovery phase, with defined outputs and no obligation to proceed to the full engagement.

2. Required final deliverables. Our core requirement is a complete, evidence-backed crypto subledger covering activity from September 2024 through an agreed current cut-off, with separate reporting schedules for 2024, 2025 and 2026. It must include invoice-to-payment reconciliation, internal-transfer matching, corporate and private separation where relevant, holdings reconciliation, historical valuation and cost-basis schedules under the agreed accounting treatment, an exception register, and a documented handover to my accountants. Please confirm which of these are included in the €60,000 and identify any exclusions.

3. Proof of reserves and pricing basis. We do require appropriate evidence of corporate ownership, wallet control, balances and commercial provenance. Please explain the specific proof-of-reserves work proposed for our circumstances, and distinguish it from the separately quoted ownership-and-control and data-validation work.

4. Responsibility and total cost. Please identify the full legal name of the contracting entity, the named technical lead and the intended report signatory. No statutory audit appointment is authorised through this proposal. Please also confirm the VAT treatment, the payment milestones, and the scope and duration of the bank and auditor query support that is included.

5. Timetable and our own inputs. Please clarify the 40-day schedule, including whether it means calendar or working days, the client inputs you will require, and which procedures depend on physical access to the hardware devices held in Cyprus.

Kind regards,

Dear Client,

Thank you – these are the right questions, and we would rather answer them in full now than discover the disagreement halfway through the work. The honest answer to the question you care about most is no: we cannot give you a meaningful Discovery phase at a small fraction of the fee. The reason is worth setting out properly, because it is the most widely misunderstood point about rebuilding crypto records.

1. Why there is no separate Discovery phase

Your instinct is sound, and in a conventional accounting clean-up it would be the right one. There, a discovery exercise is cheap because the underlying data already exists in a general ledger and in bank statements; counting it is a morning’s work, and only the remediation is expensive.

On-chain activity reverses that position. Before anyone can tell you reliably how many transactions you have, how many wallets are genuinely the company’s, or where the gaps sit, the data has to be extracted from every chain, exchange, custodian and accounting system you have used, normalised into a single ledger, and reconciled against each other. That integration build is the large fixed cost of the engagement, and it is incurred in substantially the same amount whether the period turns out to hold five thousand transactions or five hundred thousand.

A Discovery phase that genuinely produced a reliable wallet inventory and a reliable transaction population would therefore have to perform most of that work. It would cost a large proportion of the full fee and deliver none of the subledger, and you would in effect pay for the same integrations twice. That is why the engagement is quoted as a package – not to lock you in, but because the cheap first step you are asking for does not exist in a form that would actually answer your question.

What we can reasonably do instead, and what we would suggest, is to deal with your underlying concern directly: a fixed fee rather than a time-based one, so that the risk of volume sits with us and not with you; defined deliverables written into the engagement letter; and payment staged against milestones, so that you are not exposed to the whole fee before you have seen output. Where a client needs a smaller first commitment, we are willing to discuss how the engagement is phased, although any such arrangement would depend on the facts and would need to be agreed in writing before work starts.

2. No sampling: one-to-one validation

To answer the first half of your question directly: the €60,000 is not sample-based work. We do not sample, and for this type of engagement we do not think sampling can be defended.

The reason is the Cyprus tax position. Under Article 20E of the Income Tax Law, which applies to tax years beginning on or after 1 January 2026, gains on the disposal of crypto-assets are charged at a flat 8%, and a disposal includes the exchange of one crypto-asset for another, not merely a conversion into fiat. Every swap in the period is therefore its own disposal, requiring a euro-denominated acquisition cost and a euro-denominated disposal value at the moment it occurred. A sample produces an opinion about a population; it does not produce a cost-basis schedule. For the years before 2026 the analysis differs, but the evidential requirement does not: the schedules still have to be built transaction by transaction.

We therefore perform one-to-one transaction validation across the full population, irrespective of volume in any given year.

3. What the fee covers

The principal exclusions are the statutory audit itself, any tax filings or ruling applications arising from the restated figures, and any remediation of matters the exception register brings to light. Those are quoted separately once the facts are known, because quoting them now would be guesswork.

4. Proof of reserves, for a treasury that is not an exchange

You are right to challenge the label. “Proof of reserves” is normally used of an exchange or custodian demonstrating that customer assets are backed. A company holding its own assets in self-custody is a different question, and the useful procedure is a test of ownership and control.

In practice that means selecting wallets across both categories you hold – the hot wallets used for operational movements and the hardware devices used for cold storage – and obtaining direct evidence of control over them, supported by the on-chain data already reconstructed. This is where physical access matters, and it is the only part of the engagement that does. We would ask a director to be available in Cyprus to sign one or two test transactions from selected wallets in the presence of the auditors and the crypto specialists. Nothing is moved out of the company’s control; the point is to demonstrate the ability to sign.

The specialists’ working papers and signatures then form part of the auditor’s regulatory file. That is not a formality. It is what allows an audit opinion on digital assets to be defended to the Institute of Certified Public Accountants of Cyprus, and what allows third parties – a bank, an acquirer, a regulator – to place reliance on the report rather than taking a balance on trust.

So, to answer your question precisely: the proof-of-reserves work for your circumstances is the ownership-and-control test together with the data validation behind it. They are not three separately priced items in your case; they are one procedure described from three angles, and they are inside the quoted fee.

5. Fee, VAT and timetable

The 40-day schedule means 40 working days, not calendar days. On an engagement commencing at the start of October, that puts delivery towards the end of November. Payment would normally be staged in two instalments, the first on signature of the engagement letter and the second on approval of the final draft and supporting documentation; the exact milestones are agreed in the engagement letter rather than fixed here.

Bank and auditor query support during the engagement is included for queries arising out of the reconstructed data itself. Open-ended support after handover – for example a protracted correspondence with a prospective bank many months later – is outside the fixed fee, and we would rather say so now than invoice you for it later.

6. Who contracts, who signs, and what this proposal does not do

We will give you, before signature rather than after, the full legal name of the contracting entity, the named technical lead, the intended signatory of the report, and the background of each member of the team working on your file. The work is delivered by a team rather than an individual: an audit lead, a crypto technology lead and a blockchain lead, with the audit lead carrying responsibility for the report.

We also confirm the point you made, and we think it is an important one: nothing in this proposal appoints a statutory auditor. Appointing the auditor is a separate decision for the members of the company, made by separate engagement letter, and the reconstruction can be delivered to whichever auditor you choose. Keeping the two separate is good practice, and it also keeps your options open.

7. What we would need from you

• All relevant files and exports from the exchanges, wallets, ERP and accounting software used in the period.
• The complete list of wallet addresses controlled by the company, including dormant and legacy addresses.
• Internal financial statements and management accounts for the prior years.
• Confirmation of every network on which the company has moved assets, and any further network under consideration.
• Director availability in Cyprus for the ownership-and-control test, which takes a single short session.

If it would help, we are happy to take the questions above one at a time rather than asking you to approve the whole engagement at once. You can reach us at enquiries@cyprusaccountants.com.cy or on +357 22 336 309.

Kind regards,

Disclaimer: This article is published for general information only and reflects the position as understood at the date of publication. It does not constitute investment, tax, legal or audit advice and must not be relied upon as such. The fees, rates and timescales referred to are indicative, relate to one particular set of facts, and are neither an offer nor a quotation nor a guarantee of any outcome; they may change. Cyprus legislation on crypto-assets is new and subject to further guidance. Please obtain advice on your own circumstances before acting. For a consultation, contact enquiries@cyprusaccountants.com.cy or +357 22 336 309.