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ARTICLE · 19 OCTOBER 2021

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What Are Cryptocurrencies And How Do We Account For Them?

Albert Goodman
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Whilst we are awaiting the current review of FRS 102 we have to use our judgement and find the best accounting fit that we can for cryptocurrencies as they are not specifically represented in FRS 102 at present.

United KingdomTechnology
Sophie Parkhouse
Sophie Parkhouse

Whilst we are awaiting the current review of FRS 102 we have to use our judgement and find the best accounting fit that we can for cryptocurrencies as they are not specifically represented in FRS 102 at present.

So, what exactly is cryptocurrency and how do we account for it?

Is it cash?

No. Although we may consider cryptocurrencies to be likened to cash, they are not legal tender and do not meet the FRS 102 definition of:

Cash on hand and demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

Is it a financial instrument?

No. In some cases cryptocurrencies can be accepted in exchange for goods however as we have seen above, they are not cash and they do not give a right to cash either. This would result in a failing of the FRS 102 benchmark for financial instruments:

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