Founders Spotlight: a conversation with Amy Kalnoki of Bitwave

Each month, Blockbeat will conduct an exclusive interview with a visionary founder within the world of blockchain technology, showcasing their impactful contributions to the field. Founders Spotlight is proudly presented by CryptoMondays London.

Our guest author this month is Divya Prashanth of JurnyOn.

I had the opportunity to interview Amy Kalnoki, the Co-Founder and COO of Bitwave, the number one digital asset finance platform for enterprises. Bitwave automates accounting workflows, enables regulatory compliance, reduces tax burden complexity, streamlines payments, and unifies data with a modern, connected platform. Amy is a serial entrepreneur and technology industry veteran with expertise in enterprise software sales, accounting, and cryptocurrencies. Prior to Bitwave, Amy co-founded Synata, an enterprise search engine that was acquired by Cisco in 2016.
Amy is passionate about the potential for blockchain technology to change the world, and she is committed to simplifying the complexities of digital assets for organisations. She is also a co-host of the podcast The DeFi Daily.
In this interview, we’ll delve into Amy’s journey, the evolution of Bitwave, and her insights on the future of crypto accounting & blockchain technology.

Divya Prashanth: Can you tell us a bit about your professional journey and how you came to co-found Bitwave?

Amy: My background is in enterprise SaaS (software as a service), encompassing B2B SaaS startups, fintech startups, and enterprise companies. Prior to this, my co-founder Pat and I had a previous enterprise SaaS startup that we ran with a few other co-founders from 2013 to 2016. We sold that company to Cisco, where I worked for a few years before Pat and I co-founded Bitwave.

Bitwave has been around for almost six years, which is a long time in the digital assets space, making us early pioneers. The company was founded to merge my background and Pat’s background. Pat is a software engineer with extensive experience in B2B enterprise SaaS products. Our goal was to create great software tools for businesses, fueled by our passion for digital assets, crypto, and blockchain.

From day one, Bitwave’s mission has been to enable digital assets for enterprises. We brainstormed a list of all the problems businesses would face when interacting with crypto and digital assets. If a business is transacting in crypto, it faces accounting problems, tax tracking issues, and AR/AP challenges because assets cannot move in and out of a business without proper accounting. Businesses have financial obligations to track these assets and reporting obligations to fulfil.

We set out to build a comprehensive platform and suite of tools for everyone working under the CFO’s office. This includes accountants, bookkeepers, tax professionals, and operations and FP&A teams. Our tools help them do their jobs and maintain proper books and records when their business is transacting in digital assets.

Divya Prashanth:  What were some of the key moments or experiences that shaped your career in the blockchain and crypto space? 

Amy: When I was at Cisco, I worked in the enterprise collaboration group, focusing on Webex and Webex Teams, which was a Slack competitor and part of the Webex product. So, even at Cisco, I was involved in enterprise SaaS software. I developed a strong interest in blockchain technology, viewing cryptocurrencies and digital assets as excellent applications of this technology. It was exciting to consider the potential for blockchain to reshape financial systems, many of which are built on outdated technology, sometimes over 30 years old.

Blockchain offers the opportunity to revolutionise these systems with new ideas and products. Working in the digital asset and blockchain space is particularly appealing because of the innovative and experimental nature of the industry. People are developing a lot of cool stuff and trying new things, making it a great industry to be part of.

Divya Prashanth: Who do you see as your potential customer? 

Amy: As I mentioned, we’ve been around for almost six years and have hundreds of clients, exclusively businesses. We excel with enterprise clients who handle a high volume of transactions. Our most powerful software platform manages over 40 billion transactions annually for our largest client. This demonstrates our strength in handling complex enterprise use cases.

While our core customer base is enterprises, both traditional Web 2.0 companies and crypto-native enterprises, we also work with businesses of all sizes in the digital asset space, including smaller miners and NFT projects. However, enterprises remain our primary focus.

Divya Prashanth: Are you reading directly from the blockchain? When you mention accounting, are you referring to transactions coming in and out of the organization? Is it wallet-based, or are you using other techniques?

Amy: Absolutely. Bitwave aims to sit between the blockchain and your digital asset data sources, as well as your ERP or general ledger system. You can still use platforms like QuickBooks, Netsuite, Sage, Oracle DB, etc., as your ERP, and Bitwave will integrate all the transactional blockchain data into our platform. We provide the workflows and tools needed for accounting, bookkeeping, tracking, and management.

We bring in data through various methods. We integrate directly with the blockchain, run nodes, and sometimes use read-only APIs for custodial or exchange accounts. You can also input wallet xpub keys. Our goal is to have a complete picture of the transactions and the movement of crypto in and out of the business to ensure accurate accounting.

Divya Prashanth: What was that one big problem that you set out to solve with Bitwave? 

Amy: Accounting for crypto is extremely challenging. Unlike any other asset, it functions both like foreign exchange and inventory. It’s an inventory item with a fluctuating price, yet you don’t pay people with inventory. This makes crypto accounting highly complex and unique, and it’s currently the only area in accounting that is constantly evolving with new guidance being issued regularly.

None of the existing accounting tools could handle crypto for several reasons. Traditional accounting software typically supports only up to two or four decimal places, whereas crypto can require 16, 32, or even more decimal places. This discrepancy created a significant need for specialised accounting software for crypto. Businesses using digital assets were resorting to manual spreadsheets, which is not only time-consuming but also lacks auditability.

As soon as businesses began transacting with digital assets—whether buying, selling, taking revenue, mining, minting, or issuing digital assets—they needed to account for those transactions. However, no software existed to meet this need when we started. That’s why we set out to build a solution, addressing the very real and difficult challenge of crypto accounting.

Divya Prashanth: Are any large banks using your toolset? How could a banker benefit from your accounting system?

Amy: Yes, we do work with some financial institutions, though I can’t disclose them publicly. We also collaborate with several large digital asset exchanges. Bitwave can be used for FBO (For Benefit Of) accounting, which is crucial when custodying digital assets for others, as it involves tracking gains and losses due to constant price fluctuations.

We offer a full suite of tools for FBO accounting, and we have a specialized version of our platform called Bitwave Institutional, designed specifically for financial institutions.

Divya Prashanth: How has your product evolved over the last 6 years? 

Amy: Yes, as I mentioned, our most complex clients handle billions of transactions. The sheer volume of data is unique to digital assets and the blockchain. People are doing an incredible amount on the blockchain, which has driven the evolution of Bitwave.

One significant development in our product is what we used to call the data warehouse, now referred to as Bitwave Fusion. This feature provides robust capabilities for working with and transforming data. Our reconciliation and revenue recognition engine can process and account for the extremely high volume of blockchain data. The staggering volume of interactions on the blockchain underscores the need for such powerful tools.

Divya Prashanth: Can you describe Bitwave’s mission and how it’s different from other players in the market?

Amy: We are unique in our focus on the B2B use case from day one. Many have asked if our solution is for individuals or high net worth individuals, but our primary focus has always been on business accounting. Building a B2B product for businesses and large enterprises from the beginning is challenging, especially when aiming for an enterprise-grade solution. At Bitwave, we started with an enterprise-grade solution for digital asset accounting.

We also offer a separate product for institutions, specifically designed for FBO accounting, with features like segregated client reporting, segregated accounts, sophisticated provisioning, and various roles within the product. This focus on enterprises and institutions has set us apart in the space.

Our core focus is on accounting, not tax reporting. Many people think accounting and tax are the same, but they are different. While we offer tax tracking capabilities, we do not handle tax reporting. Our platform excels in accounting, revenue recognition, accounts payable, invoice processing, client reporting, data management, and FBO accounting.

Divya Prashanth: Are there any specific products or specific services that you have off the shelf for your clients?

Amy: While every digital asset environment is unique, with users employing different blockchains, tokens, and DeFi protocols, we pride ourselves on how adaptable our core offering is to these diverse setups. This adaptability has allowed Bitwave to thrive, especially in different jurisdictions with varying tax and accounting requirements. With Bitwave, you can tailor the platform to meet the specific guidance provided by your local tax advisor or accounting professional.

Divya Prashanth: Can you provide an example of how your product has made a significant impact for one of your clients?

Amy: We’ve seen many clients transition from a very manual process to using Bitwave, which has been transformative. For example, clients used to manually handle revenue recognition by looking up transactions on Etherscan, copying the data into a spreadsheet, finding the price of ETH at the time, and then entering everything into QuickBooks as individual entries. This manual process took hundreds of hours.

With Bitwave, this process is almost entirely automated. Bitwave imports the fair market value at the time of the transaction directly into our software, matches it with the transaction in your wallet, and syncs with your chart of accounts, customer accounts, and expense accounts from your general ledger or ERP. Our bookkeeping workflow matches everything, and our rules engine suggests categorization for transactions. In just a few clicks, you can reconcile transactions, track gains and losses, and generate gain/loss reports when disposing of assets like Ethereum.

This automation and streamlining can save hundreds of hours. For large exchanges or layer one blockchain protocols handling millions or billions of transactions a month, manual processes are impractical. Bitwave makes managing such large-scale transactions feasible.

Divya Prashanth: As the organisation grows, have you had to adjust your leadership style? And do you support a hybrid work culture?

Amy: Yes, we are a fully remote, work-from-home distributed team. During the pandemic, we grew significantly and transitioned to a work-from-home model. Many people joined the company during this time, making remote work a core part of our company culture.

At Bitwave, we strive to find the smartest and most passionate people about digital assets and accounting. This focus has helped us build a great team. I’m incredibly proud of the team we’ve built; everyone is passionate about digital assets and enabling enterprises to interact with this innovative technology.

Divya Prashanth: What qualities do you think are essential for a successful blockchain entrepreneur, beyond those needed for a typical tech entrepreneur?

Amy: I think the exciting part about both startups and the digital asset space is that things are always changing. To thrive, you need to be the kind of person who finds this constant change to be a fun challenge, keeping your job interesting rather than seeing it as a negative. You have to expect new blockchains, protocols, and innovations to emerge regularly. There’s always something new happening in the blockchain space, with different trends and waves.

Startups are similar. They are both like a roller coaster and a marathon – a long journey with many ups and downs. To really enjoy and succeed in both startups and digital assets, you must find the ever-changing landscape exciting and stimulating, rather than stressful or negative.

Divya Prashanth: For the next three to five years, what are your goals, and which projects and partnerships are you particularly excited about?

Amy: Right now, we partner with a range of accounting firms, from boutique firms specialising in digital asset accounting to mid-tier and regional firms, and even 

Deloitte, with whom we have a global strategic alliance. I’m very proud of the partner network we’ve built over the years. Working with accountants and professionals in the space has been great because, as a software provider, Bitwave doesn’t offer advisory or outsourced accounting services. We provide the software, support, and implementations, but we rely on our accounting partners and in-house teams at enterprises to use our tools effectively.

Partnering with leading accounting and tax professionals is key for us. We invest in and value these relationships. Additionally, we partner directly with blockchains and leading enterprises in the digital asset space. For instance, we were recently added to the Circle partner network and are a Coinbase partner. We also have large integrations with Stellar and other foundations and blockchains.

When working with custodial providers or exchanges, our goal is to help their users manage accounting and track digital assets moving in and out of their businesses. We also partner with ERP providers, such as Netsuite, Sage, QuickBooks, and Xero. Bitwave acts as a crypto-specific subledger, integrating with these ERP systems to ensure blockchain data is accurately reflected in users’ accounts. Having strong technology partners is also crucial for us.

Divya Prashanth: What are you doing to accommodate the influx of crypto ETFs? What trends are you observing?

Amy:I believe ETFs have been a very positive development for the industry. Whenever large institutions engage with digital assets, it lends credibility and increases access. Before ETFs, many people were interested in digital assets or wanted exposure but felt uncomfortable or unsure about buying Bitcoin themselves. ETFs provide an accessible way for many people to start getting digital asset exposure. Overall, I think this has been very beneficial for the industry.

Divya Prashanth: How do you envision the future of Bitwave in the context of changing regulations? It’s very positive to see increased clarity in terms of regulation. How do you see Bitwave evolving within this framework?

Amy: I think you really hit the nail on the head. What we need is clarity and clear guidelines. CFOs dislike ambiguity in regulations because they don’t want to risk legal trouble for misstatements. They need to know the rules to follow them, set up internal processes, and establish internal controls to meet obligations.

When guidance is always shifting, it discourages businesses from embracing digital assets and blockchain technology. They don’t want to invest in something that could be impacted by entirely new policies from a different administration in a year. We need a clear set of guidelines and a stable framework for businesses to operate and thrive without taking on regulatory risk.

Divya Prashanth: What advice would you give to aspiring entrepreneurs in general who are looking to enter the blockchain or the fintech industry?

Amy: I would say find something you’re passionate about that also solves a real problem. The best startups, especially in fintech B2B, address a genuine need. We recognized the need for digital asset accounting software, which I was also passionate about.

It’s crucial to merge what you love with solving a real business need because as a founder, you’ll be promoting your company and its tools every day. You have to be passionate about it and ensure it addresses a significant problem. If you can find that perfect combination, it’s a fantastic place to be.

Divya Prashanth: How do you stay informed and ahead of the trends in the industry?

Amy: I keep up with digital asset and crypto news from various online sources. However, we also place great importance on listening to our customers. Many of them are on the cutting edge, requesting integrations with new protocols or blockchains that they anticipate needing soon. By listening to these forward-thinking customers, we stay ahead of the curve and can provide tools even before they become mainstream. This helps us remain innovative and responsive to emerging trends.

Divya Prashanth: Is there anything else you would like to share about Bitwave or your journey?

Amy: I believe businesses shouldn’t shy away from using digital assets. When a company wants to use NFTs for marketing or stablecoins for same-day invoice settlement, the CFO or finance team shouldn’t have to say no because of accounting concerns. My message to finance, accounting, and tax professionals is that with Bitwave, you can offer these services while keeping your books and records in an auditable manner. Bitwave ensures that you can integrate digital assets into your business operations without compromising on financial accuracy and compliance.

Divya Prashanth: How can interested parties learn about Bitwave and get in touch with you?

Amy: You can visit our website at Bitwave.io. There’s a “Contact Us” section there. You can also email us at info@bitwave.io. On LinkedIn and Twitter, we are @BitwavePlatform.

We have a blog where we discuss digital assets and general blockchain information. Additionally, we offer Bitwave U, which features CPE continuing education credit webinars recorded with our partners and accountants in the space. Check out Bitwave U if you want to learn more about digital asset accounting.