Cryptocurrencies (Bitcoins) in Financial Reporting - New Challenge for Accountants

As the exchange and trade with cryptocurrencies is steadily rising, consequently, they become subject to financial reporting. The essence of financial reporting derives from the objective to provide stakeholders of an enterprise with sustainable information about the financial well-being of the business. Accountants might face complications meeting the objective of financial reporting considering cryptocurrencies such as Bitcoins due to the absence of guidelines in both, IFRS and US GAAP. In the first part, this paper applies the existing IAS and IFRS guidelines to this practical issue and contributes to the process by which diversification in practice can be avoided. Broadly speaking, the problem can be addressed by classifying Bitcoins as intangible assets. Whereas, Bitcoins fail the definition of cash, cash equivalents, financial instruments, as well as the definition of inventory. In the second part, a discussion concerning non-financial reporting of Bitcoins can be found.