The Financial Accounting Resource Center™ is a comprehensive research service that provides the full text of standards, the latest news from the Accounting Policy & Practice Report ®,...
By Ali Qassim
National accounting authorities urged the international standard setter to issue global guidance for cryptocurrencies so they don’t need to individually, thereby avoiding a patchwork of inconsistent rules worldwide.
Canada’s chair of its Accounting Standards Board, Linda Mezon, told the Accounting Standards Advisory Forum in London April 16 that the continued absence of guidance from the International Accounting Standards Board could become a concern to the national authorities.
“Quite frankly given the activity level in Canada, if we don’t get anything here, we’ll have to step into the void. And, as you know we don’t like to do that,” Mezon told the advisory group during a discussion on the challenge cryptocurrencies and virtual currencies pose to accounting standards.
Referring to the hacking of Tokyo-based cryptocurrency exchange Coincheck Inc. early this year, Mezon pointed out that “from a reputational perspective, it would seem that if activity like this continues to grow and nothing is put in place, that is worrisome for us as standard setters.”
Kimberley Crook, chair of New Zealand Accounting Standards Board, said IASB should be listening to feedback and not “waiting ‘til we get a big problem before we start solving it.”
Andrew Watchman, the chair of the European Financial Reporting Advisory Group, said that the issue of cryptos wasn’t a priority for his private association’s members on “pure materiality grounds"—suggesting that the issue is too minor to influence investor decisions. But he said he could understand the call for more action “given the risks, the amount attention from regulators and the growing general level of interest” in cryptocurrencies.
Australian Accounting Standards Board Chair Kris Peach said that countries like Australia and India “are sitting and waiting.” Meanwhile in Korea, where 37 crypto exchanges are operating, authorities have given “some guidance if there is an active market stating that fair value accounting is appropriate.”
China has taken more drastic steps by banning both the use of cryptocurrencies and initial coin offerings (ICOs), Yu Chen, an official at the China Accounting Standards Committee, told the meeting.
Chen said the authorities are planning to introduce “more and more strict rules,” to which IASB Chairman Hans Hoogervorst joked, “how can you get more strict than forbidding” cryptos?
Chen acknowledged that despite the ban, a “small population of entities” in China hold cryptos and highlighted how the sector has developed “beyond our imagination” to achieve market capitalization of $600 billion in the end of 2017. “That’s 330 times bigger than in 2016,” Chen said.
“Although cryptocurrency is at a very early stage and the market is not mature, how to account for them is a problem,” Chen said, supporting the calls by Canada for more urgent action on issuing some preliminary guidance.
The Accounting Standards Board of Japan has taken its first steps to tackle crypto by issuing its “Practical Solution on the Accounting for Virtual Currencies under the Payment Services Act,” which the government amended in 2016 to introduce a registration system for virtual currency dealers, ASBJ Chairman Yasunobu Kawanishi told the meeting.
The new standard became effective April 1.
Under the standard, virtual currencies with an active market should be measured at their market price, with any changes in that price being recognized in profit or loss. Those without an active market should be measured at cost, he said.
To contact the reporter for this story: Ali Qassim in London at email@example.com
To contact the editor responsible for this story: S. Ali Sartipzadeh at firstname.lastname@example.org
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)