Jennifer Hull | Accounting for crypto-assets: main concerns and practical advice | Knowledge

[ad_1]

The cryptocurrency market is booming, but the lack of accounting standards poses legal and financial risk. Jennifer Hull discusses what stakeholders need to know.

The current cryptocurrency market has a total capitalization of over $2 trillion. Major retailers like Starbucks, AT&T, and Overstock.com accept cryptocurrencies as payment. Other companies, like Tesla and MicroStrategy, claim to have multi-billion dollar holdings. Yet, as of this writing, there are no binding accounting requirements for these digital assets.

Investors, companies, accountants and legislators have demanded them, understanding the legal and economic risk posed by the lack of standards, whether it involves regulatory scrutiny, audit complications or questions from investors and regulators. analysts. Even so, no relevant US generally accepted accounting principles standard is being developed; the Financial Accounting Standards Board only recently added cryptocurrencies to its research agenda; and the International Accounting Standards Board has provided limited guidance.

For now, most companies classify their crypto holdings as indefinite-lived intangible assets, according to unofficial guidelines from the American Institute of Certified Public Accountants. But as the following case study shows, questions and concerns arise from these current directions. Here’s what relevant stakeholders need to know.

[ad_2]