Accounting for cryptocurrency has been a challenge. The discussion of accounting for holdings of cryptocurrencies under IFRS started from Dec 2016 and concluded with the release of an agenda decision by IFRS Interpretations Committee (IFRIC) in June 2019. ISCA released a Financial Reporting Guidance in March 2020 to further guide preparers of financial statements with cryptocurrency holdings.
Elven reviewed financial statements of 9 MAS licensed blockchain entities for FYE 31 December 2023. 7 entities had the MPI license while 2 entities had the RMO/CMS license.
Key Findings:
1. Out of the 9 entities, only Blockchain.com and Independent Reserve had customer crypto assets on their balance sheet.
2. Crypto.com holds customer crypto assets with its related parties.
3. Many exchanges do not have cryptocurrency on their balance sheet. Metacomp accounts for BTC/ETH as Intangible asset and USDC and USDT as inventory.
4. Coinmarketcap.com is a popular pricing source with Blockchain.com and Metacomp referring to them.
5. While most entities account for FV changes of their crypto fair value in profit and loss statement, Metacomp and IX Swap have revaluation of Intangible Asset as their accounting policy and hence account for change of their crypto fair value in OCI for gains.
Under the IFRS, the financial reporting issues are diverse and highly dependent on entity specific facts and circumstances. No uniform or definitive answers currently exist as the technology and regulations evolve constantly. While a standardized accounting method may lead to more consistent and useful financial statements, the industry will need to wait for IFRS to incorporate new standards or guidance. Preparers of financial statements will need to ensure that the related accounting and disclosures are appropriate and adequate.
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