I read with interest the article in the June 2019 CPA Journal by Andre Sterley (“Cryptoassets: Accounting for an Emerging Asset Class,” http://bit.ly/2l7CYf9). It’s an excellent article about how cryptoassets (a superset of cryptocurrencies) cannot fit well within U.S. GAAP or IFRS. I make these two comments:
For next steps, this should really be a call for academia to research this asset phenomenon and arrive at recommendations for accounting measurement, recognition and classification, protocols for attest and audit, and possible regulations. It appears that for now, the U.S. marketplace is overregulated and possibly losing in capital due to lack of maturity in the understanding of this class of assets. There may also be an unknown risk to auditors opining on such assets.
Second, as it stands now, managers and especially auditors should be wary of the “GAAP trap” that allows cryptoassets to be evaluated as a probable or “likely” future benefit. The threshold of “likely” should not be interpreted simplistically as a “possibility, or probability greater than 0%.” Such an interpretation may lead to accidental or intentional inflation of value and misclassification of an expense as an asset.