What is a crypto-currency?
“Crypto” means secret or concealed, hence, a crypto-currency is actually a secret currency! The modern version of a crypto-currency is in its digital form and usage. In technical terms, a cryptocurrency is a decentralised digital currency with no physical form.
The accounting treatment of the crypto-assets depends greatly on the purpose for holding the crypto-assets. The purpose can differ for different parties. For example, the issuer of the crypto-currency who has created the crypto-currency through its efforts, may view their crypto-currency created as inventory. Subsequent to the issue, the holders of crypto-assets who make use of these assets as a currency for purchase of goods or services, or for trading may treat it as cash.
Is crypto-currency cash?
Cryptocurrencies are mainly used as a medium of exchange for goods and services, to some extent like a currency. Unlike transitional currencies, cryptocurrencies are not issued and backed by any government and involve no central repository or central bank; hence, they are not recognised as legal tender (fiat money).
As a result, cryptocurrencies are not considered as cash.
Inventories
When the crypto-assets are treated as inventory, the holders may apply the commodity broker-trader exception in MFRS 102 to measure them at fair value less cost to sell, with changes in fair value recognised in profit or loss rather at the lower of cost and net realisable value.
Although the accounting for crypto-currency is not simple and varies between transactions, the standard setters are unlikely to develop a separate accounting standard to fit all situations when it comes to crypto-currency.