Blockchain and crypto companies may be operating with cutting-edge technology, but in the back-office, accounting and bookkeeping strategies are stuck in the stone age. Yes, that means many of these businesses are still working with manual tools like Excel spreadsheets.

According to Jake Benson, CEO of back-office software provider Libra, that's because traditional accounting and auditing software solutions aren't compatible with blockchain, rendering them unable to access, manage and analyze financial data stored on distributed ledgers.

Libra, which recently announced $7.8 million in Series A funding, provides blockchain-native accounting, auditing and tax software for blockchain and crypto companies and the financial professionals that service them. These businesses are desperate for technology that can work with that on which their companies were built, Benson said.

“The fact is, they're managing all of their books and records and valuation manually in Excel spreadsheets right now,” he told PYMNTS. “They're dying for a solution. There is a huge gap right now, and traditional accounting software doesn't integrate with blockchains and cryptocurrencies.”

The inability for traditional accounting solutions to address the nuances of a business that runs on blockchain or operates in cryptocurrency — Benson identified Libra's key targets as “funds, market makers and exchanges” — can get quite technical.

“You need to be able to connect to blockchains themselves in order to capture the transactions directly,” he said. “It's a different technical need. They're not your standard databases, they're not your standard debits and credits.”

He added that accounting solutions have to be able to connect directly into the dozens of cryptocurrency exchanges in operation today where crypto-trading occurs. Because these exchanges are so new, traditional accounting software is typically not able to integrate, but there are straightforward reasons behind the incompatibility, too.

Take, for instance, the ability of accounting software to record figures out to more than just a few decimal places.

“In traditional software, you might see four decimal places,” said Benson. “But in crypto, you have 18 or 24 decimal places that you can subdivide a single unit. That's not something traditional accounting software has taken into account.”

Like any business, manual record keeping can be a high-stakes strategy, especially when it comes to regulatory compliance. Benson explained that at the bare minimum, these companies must be able to report gains and losses.

“You have to report to the IRS on a line-item basis every single time you dispose of an asset that results in a capital gain or loss,” he said. “You need line-item detail, and that's the minimum.”

The financial regulatory landscape, however, is complex, demanding, and constantly changing, and for blockchain and crypto companies, regulation can often be an uncertainty.

Earlier this month, reports in Bloomberg Law predicted regulatory oversight will ramp up in 2018 when it comes to cryptocurrency exchanges, for example.

“I think this is all a lot closer than people think,” said James Taylor-Copeland, founder of Taylor-Copeland Law, in an interview about the crypto industry's incoming regulation. “Quite frankly, the amounts of money involved now are too significant for regulation and litigation not to be coming.”

Regulation, in addition to an influx of lawsuits, is likely to impact valuations, reports added, noting that industry experts predict the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission, the Internal Revenue Service (IRS) and the Treasury Department's Financial Crimes Enforcement Network are all expected to issue their own specific guidances for crypto exchanges.

With greater attention and investment in blockchain and cryptocurrency technology comes heightened criticism over many areas of the industry. Initial coin offerings (ICOs), for instance, have fallen under the radar of the SEC. In August, reports emerged that said the SEC would be regulating bitcoin ICOs and token sales; last month, its newly-created Cyber Unit obtained an emergency asset freeze to halt an ICO fraud.

Regulatory focus on this industry is increasing, and industry players will be pressed to be transparent and compliant.

“Regulation can rapidly change," said Benson. “You want software that adapts to those changes so it doesn't result in a manual headache.”

Solutions have to take into account the pace of regulatory change, and have to stay updated in real-time for this industry, too, he added.

With its latest funding and the recent launch of Libra Crypto Office — an app to automate middle- and back-office processes — and with plans to launch Blockchain Audit Tools next year, Libra is positioning itself in the center of the blockchain and cryptocurrency world. But, according to Benson, as more financial services players and companies in other verticals begin to explore how they can use blockchain and cryptocurrencies, the accounting space will have to evolve to be able to integrate and work with these technologies.

In Benson's view, the world is moving in this direction.

“The efficiencies gained with blockchain [are] going to fundamentally change the way value is transferred,” he said. “I believe all asset classes are going to be tokenized. That means you have traditional institutions that are going to be interacting with this technology. Blockchain is fundamentally a new way of record keeping. They're ledgers, at the end of the day, and ledgers are at the core of the job of accounting and auditing. So, as everything tokenizes, as everything moves into a blockchain-based world, the jobs that will be most fundamentally changed are the jobs of the accountant and auditor.”