Page 44 - CMA Journal (Jan-Feb 2026)

Focus Section
Cryptocurrency Accounting

under IFRSs: Classification,

Measurement and Disclosure

1) Introduction • Utility Tokens – The
use of utility tokens
Cryptocurrency has become one of the most significant
allows for access to a
financial innovations of the 21st century. A technological
product or service on
experiment that started out as a niche has now turned
a platform.
into a global asset class that appeals to both individuals
and institutions. Accounting challenges arise from • Security Tokens –
cryptocurrency because it does not fit directly into the These tokens are
traditional financial reporting framework. The focus of used to express
this article is on cryptocurrency's accounting treatment ownership interests
under International Accounting Standards (IASs) and or debt-like claims
International Financial Reporting Standards (IFRSs), as
• Stablecoins – These
well as its background, characteristics, investment
are tied to fiat
relevance, and comparison to traditional currencies.
currency or assets to Ahmad Tariq Bhatti, FCMA
2) Origin & Background decrease volatility.
Director, Bizmax Global
Bitcoin was launched by Satoshi Nakamoto in 2009, Accounting consider- Consultants, UK
leading to the creation of cryptocurrency. Bitcoin was ations may vary
designed to function as a decentralized digital currency depending on the type, particularly if contractual rights
that does not have a central authority like a government or obligations exist. These are economic or regulatory
or central bank. The technology used behind it is classifications, not accounting categories under IFRSs.
blockchain, which is a distributed ledger that records The accounting treatment depends on the contractual
transactions securely and accurately. rights and obligations, not token labels.
Bitcoin was followed by the development of thousands 5) Comparison with Normal Currency
of other cryptocurrencies, such as Ethereum, Ripple, and
Litecoin. Over the years, cryptocurrencies have
Feature Normal Currency Cryptocurrency
developed beyond basic payment mechanisms and now Issuer Central bank No central authority
encompass smart contracts, decentralized finance, and Legal tender Yes No
digital asset ecosystems. Physical form Notes and coins Digital only
Volatility Relatively stable Highly volatile
3) Market Capitalization & Growth
Regulation Highly regulated Limited or evolving
The cryptocurrency market's growth has been Accounting Cash Not cash under IFRSs
phenomenal despite its extreme volatility. The global treatment
cryptocurrency market capitalization is $3.31 trillion on
Legal tender status and acceptance as a medium of
January 18, 2026 (www.forbes.com/digital-assets);
exchange are crucial under IFRSs. These criteria are not
however, it fluctuates sharply because of regulatory
met by cryptocurrencies, which significantly impact their
actions, market sentiment, and macroeconomic factors.
accounting classification and treatments.
Over half of this value is contributed by Bitcoin alone,
with Ethereum and Stablecoins also contributing 6) Financial Accounting &
significantly.
Reporting Challenges
Cryptocurrencies, even though highly volatile, are
Three main accounting challenges are associated with
increasingly owned by corporations, investment funds,
cryptocurrency:
and even some governments, therefore making their
financial reporting a highly critical matter. • Classification – What type of asset is it?
4) Types of Cryptocurrencies • Measurement – How should it be valued?
• Payment Tokens – These tokens serve as a means of • Presentation and Disclosure – Where and how
exchange (such as Bitcoin) should it be reported?

42 ICMA’s Chartered Management Accountant, Jan-Feb 2026