Accounting Measurement and Recognition of Digital Cryptocurrencies: Challenges, Practices, and Recommendations

The emergence of digital cryptocurrencies has disrupted traditional financial systems and challenged existing methods of measuring and recognising financial transactions. This paper aims to explore the different methods and reasons for the accounting measurement and recognition of digital cryptocurrencies worldwide, summarise the findings, and provide recommendations for the accounting treatment of digital cryptocurrencies. Through a review of recent literature on accounting for digital cryptocurrencies and reference to the decisions made by various organisations and governments worldwide, this paper discusses the challenges posed by volatile prices, complex valuation methods, and the lack of uniform accounting standards. Additionally, the paper highlights the potential for fraud and accounting confusion created by cryptocurrencies, using real-world examples. The paper concludes that recognising digital cryptocurrencies as intangible assets and measuring them at fair value is the most appropriate accounting treatment, with proper disclosures to address the inherent risks. This paper provides valuable insights for academics, practitioners, and regulators in understanding the accounting treatment of digital cryptocurrencies.