„The money you have is the weapon of freedom.
The money you pursue is an instrument of slavery.“
Jean-Jacques Rousseau

The development of digital technologies has introduced "virtual assets" (VA) into circulation. The first virtual asset is a cryptocurrency - bitcoin, which is a means of decentralized payments through alternative channels. Cryptocurrency payments have created significant problems. in particular.
In practice, there are different and inconsistent approaches related to accounting and reporting of cryptocurrencies; Our goal is to assess the current situation based on an analysis of theoretical and practical issues of accounting and reporting of cryptocurrencies. Accounting of this segment is in the initial stage of formation and development, so research is less based on practical accounting data. Thus, the study covered mainly the materials presented in the literature, and due to the lack of empirical data, relatively less - the subject of the study. The study presented in the article is our attempt to evaluate IFRS accounting approached for cryptocurrencies. Based on the results of the study presented in the paper, we provide below the following conclusions:
At this stage, the International Financial Reporting Standards Board (IASB) has not developed a standard to regulate cryptocurrency accounting and reporting. Thus, at the initial stage, the accounting models for cryptocurrencies were based on the recommendation of IAS-8 that, in the absence of particular standard for this transaction, based on professional judgment, it is possible to choose an accounting policy that will comply with fundamental accounting principles and ensure that appropriate and reliable information is obtained. for making economic decisions (IAS 8.10), and in the process of working on accounting policies, management should rely on the literature recommended by IFRS and use them in accordance with the established hierarchy (IFRS 8.11). In the context of the economy globalization, it is especially important to coordinate and take into account the best practices and approaches, to develop Internationally recognized unified accounting and reporting guidelines, because due to the prevailing circumstances, companies have established inconsistent and often erroneous approaches to accounting of cryptocurrencies. This attitude significantly limits the fair presentation of assets in financial statements and the quality of information transparency.
Cryptocurrency meets the criteria for recognition as an asset, defined by the conceptual framework for financial reporting. None of the current standards directly regulates the accounting, valuation and presentation of cryptocurrencies. According to IAS 8 , it is assumed that in the absence of standard for specific transaction, accounting policies should be developed based on the requirements and guidance of those standards and interpretations relating to similar and related transactions. The specific regulatory price of a cryptocurrency is determined by the respective cryptocurrency asset class. An analysis of the cryptocurrency characteristics and comparison with other assets showed the following:
Cryptocurrency, is not money and differs from fiat money in that it is a virtual currency without material content; is not a functional currency and cannot support the filing of financial statements of companies, is not legal tender, and therefore is not treated as cash; It should be noted that the recognition of cryptocurrency by the European Courts as an alternative to national currencies has put bitcoin on a par with traditional fiat currencies; Some economists also consider that any payment received in cryptocurrency (CC) is considered a foreign currency transaction and constitutes a monetary item;
Cryptocurrency is neither cash equivalents, since, unlike them, cryptocurrency is characterized by a high risk of value changes and volatility, cryptocurrency is not recognized as legal tender; It is neither supported by the central banking system and nor widely accepted as a mean of exchange.
Depending on the purpose of holding, cryptocurrencies should be treated as an inventory if they are held for sale, and as an intangible asset if they are held for investment purposes. Therefore, it is assumed that the accounting model that corresponds to the accounting for cryptocurrencies is IAS 38 and IAS 2. But, in our opinion, these models have some uncertainty, for example, it is not clear how IAS 38 should regulate intangible assets transferred for own use and intangible assets held for investment purposes.
The valvulation of Cryptocurrency is usually a subjective process and no single methodology has been established, but according to the conceptual framework of financial reporting, assets are recognized at historical cost, i.e. cost, which includes the costs incurred to acquire or to create an asset, including transaction costs. In case of accounting for cryptocurrencies at fair value and disclosure of additional information in the notes to the financial statements, it is necessary to calculate the fair value. We consider it appropriate that out of the three existing approaches, the fair value of a cryptocurrency should be estimated using the cost method, since in an active market it is possible to use the relevant empirical input data to the maximum to estimate the fair value. The accounting policy that presens the results of the fair value measurement and revaluation of cryptocurrency in the income statement will be materially relevant and appropriate for users of financial statements;

Taking into account the uniqueness and diversity of cryptocurrency – the descriptions and definitions of digital (cryptographic) products should be created while working on accounting and reporting regulations; Also, due to the peculiarities of accounting models for transactions with cryptocurrency, it is important to develop a package of relevant and suitable accounting documents;
The absence of regulations or their weakness will not be an obstacle to the accounting of cryptocurrencies, because cryptocurrencies and virtual assets are already existing, objective reality. Due to deficiencies in the laws, companies face significant risks in the process of selecting and applying the appropriate standard or suitable rules.

Keywords: Cryptocurrency, blockchain, bitcoin, crypto-asset accounting models, mining, supplies, intangible, assets.
JEL Codes: E00, E42, E51, E52

References:

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