Suzanne Morsfield, Policy Advisor at CUK, shares insights from a recent discussion at the IFRS Foundation. The discussion included thoughts from international accounting standard setters on how crypto accounting could be improved globally.

While the digital assets industry has recently been focused on the UK’s election and the new government, significant news for IFRS reporting crypto holders and users may have slipped under the radar.

On 9th July 2024, the Accounting Standards Advisory Forum (ASAF), discussed an IFRS research project on improving accounting for intangibles, potentially including cryptoassets as a subtopic. 

Current IFRS guidance can, and should, be used to report cryptoasset holdings and transactions. However, both users and preparers have long questioned whether the resulting information presented in IFRS financial statements accurately reflects the underlying economics and accounting meaning of these assets and activities. 

Global standard setters appeared to strongly support the project overall, as well as the inclusion of cryptoassets for further review. The UK Endorsement Board (UKEB) presented several of their research projects highlighting the need for such improvements, including focusing on the many and varied use cases for cryptoassets rather than a sole or limited fixation on asset classification, investment, and speculation uses. Similarly, the Accounting Standards Board of Japan (ASBJ) conveyed their approach to crypto accounting that already takes such forward-looking concepts into account. 

While IFRS standards are not currently designed to foster new businesses or drive economic growth, effective corporate reporting can enhance both. This is due to the crucial need to understand how best to communicate the actual economics of crypto activities and holdings to users or corporate reports. 

The next steps for the International Accounting Standards Board (IASB) include the deciding on the following: 

• The problem that the IASB needs to solve.
• The scope of the project.
• The IASB’s approach to staging the work.

CryptoUK’s position and advocacy

CryptoUK advocates for proportional, effective standards and regulations globally. 

Consequently, we support global accounting standard-setting projects that have the potential to enhance the decision-usefulness of information about an entity’s crypto activities. We particularly value the due process and transparency that authoritative standard-setting provides and look forward to contributing to any outreach that may benefit the IFRS staff and the Board on this timely project.

How to get involved?

If you are interested in participating in CryptoUK’s corporate reporting advocacy initiatives, knowledge sharing and responding to calls for industry input from bodies such as the IFRS Foundation and ASAF, then consider joining the Cryptoassets Accounting Working Group. 

Contact our team to learn more.