Can Digital Assets/ Crypto Currencies be accounted in UAE

Cryptocurrencies have gained significant attention and piqued the interest of global investors in recent times. The United Arab Emirates (UAE) is also experiencing a rise in the establishment of exchange platforms to facilitate crypto trading. However, as a new and evolving asset class, cryptocurrencies lack specific guidelines for clear-cut accounting methods. Consequently, the process of accounting for cryptographic assets can be intricate, involving multiple complex elements and factors. In this blog, we will explore the accounting methods for cryptocurrencies in the UAE.

Cryptocurrency - Intangible Asset or Not?

Experts suggest that since the International Financial Reporting Standards (IFRS) do not contain a specific standard for crypto assets, the use of the IAS 38 Intangible Assets may be more appropriate. This is because the characteristics of virtual currency assets closely resemble those of other conventional intangible assets. Therefore, the IAS 38 standard can aid in the proper accounting of crypto assets, as it provides a suitable framework for their recognition, measurement, and disclosure in financial statements.

As per the guidelines in IAS 38, an asset can be classified as identifiable if it possesses the ability to be separated or derived from contractual or legal rights. Moreover, an asset can be deemed divisible from the entity if it can be sold, transferred, licensed, rented, or exchanged independently or in conjunction with any associated contract, identifiable asset, or liability.

Thus, it appears that cryptocurrency meets the definition of an intangible asset in IAS 38 as it is capable of being separated from the holder and sold or transferred individually and, in accordance with IAS 21, it does not give the holder a right to receive a fixed or determinable number of units of currency. In a nutshell, cryptocurrency meets the definition of an intangible asset as it is separable from its holder and able to be sold or transferred individually.

Difficulties in Bookkeeping Cryptographic Assets?

• Since it is evolving, everyone involved in the field of cryptographic assets should stay informed of the latest developments in this area to remain updated on changes.
• Some cryptographic assets can be hybrid varieties with multiple characters, making accounting treatment difficult to determine.
• IFRS does not provide an exclusive advisory for cryptographic assets, so users may have to categorize and account for these assets based on existing standards.
• The volatility of their prices makes it hard to determine the fair value of crypto assets.

Conclusion

Accounting for cryptocurrencies in the UAE requires careful consideration and dedication. With the emergence of cryptocurrencies as a new and rapidly evolving asset class, entities must remain informed and vigilant in managing these assets.

At Reyson Badger, we understand the importance of accurate accounting and reporting when it comes to cryptographic assets, which is why we offer high-quality crypto accounting services in Dubai. Our passionate team of accountants in Dubai is well-versed in the latest developments and trends within this field and committed to providing exceptional service and support to our clients. We ensure that our clients receive reliable and accurate crypto accounting services to help them effectively manage their cryptographic assets in the ever-evolving UAE market.