Bitcoin Accounting Standards Making Gains in Australia

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The Australian Government is requesting international action on digital currencies. The Australian Accounting Standards Board (AASB) published a new document before the meeting with the International Accounting Standards Boards (IASB) this month.

Australia’s document makes the case for implementing standards for digital currencies and intangible assets.

A lack of clarity and guidance is noted by governments. The AASB develops accounting standards in Australia’s public and private sectors. The document’s principal author, Henri Venter, states that the current framework provides insufficient measures to handle digital currencies.

Venter insists that digital currencies “should be measured at a fair value with changes in fair value recognized as profit or loss.”

The paper questions the lack of accounting standards for digital currencies and brings it into the spotlight ahead of December’s meeting. Experts argue that digital currencies require attention, and Australia’s government has a right to ask for new standards on digital currencies.

Digital currencies don‘t meet the standard definition for cash or cash equivalents.

The document states, “In our opinion, it would not be appropriate to amend the definition of cash until such time that a digital currency is a widely accepted method for exchange, supported by a central bank and recognised as legal tender. This will probably only be a relevant alternative when governments globally acknowledge a digital currency as legal tender.”

Bitcoin, the largest digital currency, has a market capitalization of $10.9 billion as of October 2016, up from $4.33 billion a year prior.

The current accounting standards lack proper measures to take against intangible assets. A lack of standards to follow makes it difficult to account for commodity type assets that are not inventory or financial instruments.

The AASB is asking the IASB for clear guidance on the matter.

All parties will meet at the Accounting Standards Advisory Forum on Thursday and Friday in London. The IASB will be seeking information and ideas from members on how to create standards for digital currencies.

Digital currencies have increased over the past few years, with online payment processors offering options for customers to pay in Bitcoin and other currencies. Bitcoin’s value fluctuates based on market conditions and is more akin to gold in fluctuation than a standard currency.

Australia’s recommendation for remedying the issue is to amend the definition of cash or cash equivalent to include digital currencies. Countries around the world are working to find ways to tax income from digital currencies.

Jacob Maslow is our Editor, and has extensive experience with writing about global financial matters. He also runs a successful SEO consulting business, Mekomi Marketing