Cryptocurrencies: How should they be Reported and Valued on the Financial Statements?

Innovation in technologies of financial systems over the past two decades has resulted in new payment channels and options for raising capital; this includes the formation of a variety of digital assets, including cryptocurrency. Today, cryptocurrencies have become imbedded into the financial systems of business, with recent and rapid widespread adoption there are impacts on the financial statements. The environment is constantly evolving where regulatory bodies are trying to keep pace, while accountants at the forefront interpret and apply existing regulations to cryptocurrency transactions. This paper will discuss to see if what is currently being done is sufficient or is further change needed. Through reviews of current accounting, tax and securities trading regulations in Canada and the United States determining where cryptocurrencies best fit, and analyzes financial statements for public companies to see how cryptocurrencies are being valued, classified and disclosed in annual reports. The author’s recommendation is based on research and analysis found from regulations, public company financial statements and industry expert opinions.