The International Financial Reporting Interpretations Committee (IFRIC) has said that cryptocurrencies are neither cash nor financial assets, but meet the definition of an intangible asset, Coindesk reports.
The news came via The Korea Times this week, which reported a statement by the Korea Accounting Insitute, which referred to the IFRIC, made in London this summer.
Coindesk says, “The London-based IFRIC, which sets the International Financial Reporting Standard (IFRS), concluded in a little-noticed document dated June 21 that holdings of cryptocurrency meet the definition of an intangible asset, on the grounds that “(a) it is capable of being separated from the holder and sold or transferred individually; and (b) it does not give the holder a right to receive a fixed or determinable number of units of currency.” IFRIC also added that in some cases, cryptocurrency could be accounted for as inventory if an entity “hold cryptocurrencies for sale in the ordinary course of business.”
However, as Coindesk points out, this document only reflects the thinking of IFRIC, and is not a rule. But, as it also notes, once IFRIC sets a standard, it is usually followed. The IFRS is used in about 144 jurisdictions and is required for public companies in Singapore, South Korea and almost all of Europe, although the USA has so far only used the framework of the generally accepted accounting principles (GAAP).
IFRIC and accountancy bodies have been discussing how to treat cryptocurrency since 2016, and the IFRIC recently received 23 comment letters on the subject from a wide range of interested parties, including the Hong Kong Institute of Certified Public Accountants (HKICPA), The Indonesian Financial Accounting Standards Board, the Korea Accounting Standards Board (KASB) and the Accounting Standards Board of Japan (ASBJ).