Digital Financial Assets: Problems of Recognition, Valuation and Legal Regulation in Accounting

Keywords: blockchain, Bitcoin, cryptocurrency, digital financial assets, transaction.

Abstract

The article reveals the author’s vision of the recognition, valuation and legal regulation of accounting of digital assets at company level.

The economic nature of cryptocurrency is discussed through interpreting the functions of money: a measure of value, a means of circulation, a means payment and accumulation, and the global money. It is concluded that cryptocurrency does not comply with the classical definition of “money”, because it does not feature its main functions. But it can be said that cryptocurrency constitutes the first opened, digital alternative currency able to take the form of traditional money.  

The procedure for cryptocurrency valuation in the business stocks and intangible assets is analyzed. In cases when a business entity is intended to buy cryptocurrency as a commodity, the transactions related to cryptocurrency flows should be recorded on the account 28 “Commodities”, whereas the transactions related to cryptocurrency production should be recorded on the account 26 “Finished products”.    

The proposed improvements in cryptocurrency accounting in the company stocks will be realizable when the transactions on cryptocurrency purchase or production (mining) are performed on permanent basis. The recognition of cryptocurrency in the intangible assets of a company will be feasible on the following conditions: cryptocurrency does not have a physical form; it can be identified; it is a non-monetary asset. The distinctive features of Bitcoin in relation to financial instruments are outlined, ways of cryptocurrency production using ІСО, mining, forging etc. are discussed. 

Regarding the legal regulation of cryptocurrency circulation in Ukraine, it is revealed that no normative and legal document exists to specify the legal status of the notions “virtual assets”, “digital financial assets” or “cryptocurrency”. By now, the draft law has been approved, intended to regulate purchase, sale and taxation of virtual assets. The official recognition of digital financial assets and blockchain technology is expected to promote the transition of Ukraine to the digital economy. This transition is going to give rise to the emergence of a new object of accounting, e. g. digital financial assets. The authors’ vision of the normative and legal regulation of cryptocurrency accounting at micro- and macrolevel allowed to propose a new national standard of accounting “Digital financial assets”, to develop a methodological framework for reporting the data on digital financial assets and their disclosure in the financial statements of companies.          

Downloads

Download data is not yet available.

References

1. Arkhireiska N. V., Kuchkova O. V. (2019). Mekhanizm funktsionuvannia kryptovaliut [The Mechanism of Function of Cryptocurrency]. Biznes Inform – Business Inform, 2, 407–417. Retrieved from https://www.business-inform.net/export_pdf/business-inform-2019-2_0-pages-407_413.pdf [in Ukrainian].
2. Bacho R. I. (2015). Derzhavne rehuliuvannia rynkiv finansovykh posluh v umovakh funktsionuvannia virtualnykh valiut (kryptovaliut) [Official regulation of financial service markets in the conditions of virtual currency (cryptocurrency) operation]. Biznes Inform – Business Inform, 11, 294–298 [in Ukrainian].
3. Voblenko В. Е. (2020). Bukhhalterskiy uchet tsyfrovykh tranzaktsiy [Accounting of digital transactions]. Abstract of PhD thesis. Saint-Petersburg. Retrieved from https://unecon.ru/sites/default/files/d21voblenkoev.pdf [in Ukrainian].
4. Savluk M. I., Moroz A. M., Lazepko I. M., et al. (2011). Hroshi ta kredyt [Money and credit]. Savluk M. I. (Ed.). 6th ed., rev. and suppl. Kyiv: National Economic University [in Ukrainian].
5. Dmytrenko T. L., Liubych O. O. (2020). Uprovadzhennia mizhnarodnykh standartiv rehuliuvannia rynku virtualnykh aktyviv v Ukraini [Introduction of international standards for regulation of the virtual asset market in Ukraine]. Finansy Ukrainy – Finance of Ukraine, 9, 65–79 [in Ukrainian].
6. Duchenko М. М., Pavlenko T. V. (2018). Osoblyvosti formuvannia rynku kryptovaliut v Ukraini [The specifics of the formation of the crypto-currency market in Ukraine]. Efektyvna ekonomika – Effective Economy, 12. Retrieved from http://www.economy.nayka.com.ua/pdf/12_2018/111.pdf [in Ukrainian].
7. Kyrylieva L. O., Shekhovtsova D. D. (2018). Metodychnyi pidkhid do obliku rozrakhunkovykh operatsii pry vykorystanni kryptovaliuty [A methodical approach to the accounting of banking operation using crypto-currency]. Biznes Inform – Business Inform, 3, 304–308. Retrieved from https://www.business-inform.net/export_pdf/business-inform-2018-3_0-pages-304_308.pdf [in Ukrainian].
8. Nematerialni aktyvy. Mizhnarodnyi standart bukhhalterskoho obliku 38. Mizhnarodnyi dokument No 929_050 vid 01.01.2012 [Intangible assets. International standard of accounting 38. International document No 929_050 from 01.01.2012]. Retrieved from https://zakon.rada.gov.ua/laws/show/929_050 [in Ukrainian].
9. Polozhennia standartu bukhhalterskoho obliku 9 “Zapasy” [Provisions of the accounting standard 9 “Stocks”]. Retrieved from http://zakon4.rada.gov.ua/laws/show/z0860-99 [in Ukrainian].
10. Pro obih kryptovaliuty v Ukraini: proiekt Zakonu Ukrainy No 3637 vid 02.12.2020 [Circulation of crypto-currency in Ukraine: draft law of Ukraine No 3637 from 02.12.2020]. Retrieved from https://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=69110
11. Hileman G. Cryptocurrency and blockchain. University of Cambridge, UK Published on November 30, 2017.

Abstract views: 7
PDF Downloads: 4
Published
2021-11-03
How to Cite
PYLYPENKOО., & YURCHENKOО. (2021). Digital Financial Assets: Problems of Recognition, Valuation and Legal Regulation in Accounting. Scientific Bulletin of the National Academy of Statistics, Accounting and Audit, (4), 38-44. Retrieved from https://nasoa-journal.com.ua/index.php/journal/article/view/225