Crypto assets have become increasingly prevalent with the rise of blockchain startups. Beyond serving as investment tools, they are now integrated into corporate supply chains—whether through holding Bitcoin, Ether, or other tokens. Businesses must understand these assets' nature, their impact on financial statements, and proper accounting recognition.
Types of Crypto Assets
Crypto assets broadly fall into two categories:
Cryptocurrencies (e.g., Bitcoin, Ether):
- Function similarly to fiat currencies for transactions.
- Held for investment, trading, or speculative purposes.
Tokens:
- Digital assets exchanged via distributed ledger technology (DLT).
- Issued through ICOs, STOs, or IEOs to raise capital.
- Classified as security tokens (equity-like rights) or utility tokens (access to goods/services).
Are Cryptocurrencies Financial Assets Like Derivatives?
No.
The IASB’s 2019 IFRIC Agenda Decision clarified that cryptocurrencies:
- Do not meet IFRS 9’s definition of financial assets (lack contractual rights or equity features).
- Are not cash equivalents due to volatility and limited acceptance as payment.
- Typically classified as intangible assets (IAS 38) unless held for sale (then under IAS 2 Inventory).
Exceptions:
- Broker-dealers trading crypto may use fair value through profit/loss (IFRS 15 “control” tests apply).
Accounting for Token Issuance
Treatment depends on token type:
| Token Type | Issuer’s Accounting | Holder’s Accounting |
|-----------------------|-----------------------------------|-----------------------------------|
| Security Tokens | IAS 32 (equity/debt classification) | IFRS 9 (fair value measurement) |
| Utility Tokens | IFRS 15 (contract liability) | Prepayment for goods/services |
Key Challenge: Distinguishing security vs. utility tokens (see Case Studies below).
Case Studies
DAO Token (2017)
- SEC classified it as a security due to profit expectations from voting rights and resale.
- Required U.S. securities law compliance (registration/disclosures).
TurnKey Jet Token (2019)
- SEC deemed it a utility token: fixed at $1, no profit potential, strict usage restrictions.
Mining Rewards Accounting
Self-miners receiving crypto rewards face two approaches:
- Revenue Recognition: Record income at receipt (fair value at mining date).
- Intangible Asset: Capitalize costs under IAS 38 (rarely applied).
👉 Learn more about crypto mining economics
Valuation & Disclosure
Post-recognition, entities must:
- Apply IFRS 13 (fair value hierarchy: Level 1–3 inputs).
Disclose:
- Crypto holdings’ purpose/units.
- Accounting policies.
- Market risks (volatility, liquidity).
Example: A token initially valued via Level 3 inputs may shift to Level 1 if traded in active markets.
FAQs
Q1: How do regulators classify crypto assets?
A1: Varies by jurisdiction (e.g., SEC’s Howey Test for securities; EU’s MiCA framework).
Q2: Can crypto be revalued under IAS 38?
A2: Only if using the revaluation model (rarely permitted for public companies).
Q3: What if a token combines utility and security features?
A3: Split accounting (e.g., bifurcate liability and equity components under IAS 32).
Conclusion
Crypto accounting remains nuanced, requiring case-by-case analysis of rights, risks, and regulatory frameworks. Professional judgment is critical—especially for hybrid tokens or evolving business models.
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Table 1 and case studies adapted from KPMG Taiwan (2019).