The latest edition of E-Forex magazine features two crypto reference data experts from Lukka. Zain Ahmed and Rachel Walker’s detailed article on crypto reference data, Reference Data: The key that unlocks the crypto ecosystem is a must read for investors in digital assets.
The rapid growth of the crypto asset market and lack of a unified governing body has resulted in a decentralized and distributed market where there is no central source of data. Unlike other mature markets that have been around for decades, there is no security master that tracks the data required for fundamental market functions such as calculating valuation and cost basis.
Given the mass influx of new digital assets and market participants, the job of monitoring, extracting, researching, and normalizing data has eclipsed what can be accomplished with basic tools like spreadsheets.
In the crypto ecosystem, there has been no concept of universally accepted identifiers, unlike those used for traditional asset classes such as CUSIPS and ISINs. New exchanges are popping up every day and typically they decide independently on their own ticker naming convention. This can mean that same ticker code may be used to refer to multiple, different, assets across exchanges in the crypto ecosystem.
No central source tracks the industry’s daily listings and delistings activity, making it easy for tickers to be recycled, and that can result in costly mistakes. Without cross-referencing historical data, investors have a difficult time valuing and reconciling their transactions.
Being able to calculate cost basis is essential for accurate financial reporting. It becomes even more complicated when corporate actions, like forks and mainnet swaps, come into play. Crypto accounting accuracy hinges on the availability and completeness of your data.
The continued, fast-paced evolution of the crypto ecosystem requires a sophisticated approach to managing transactions. Lukka Reference Data is the most comprehensive up-to-date master repository of crypto asset data that can be used to fuel the continued growth of the market.