Ask anyone about the accounting for holdings of cryptocurrencies and one may intuitively expect it to be similar to the accounting for holding cash. However, the IFRS Interpretations Committee (IFRIC) concluded otherwise in its agenda decision on the holdings of cryptocurrencies in June 2019, as “cryptocurrencies do not currently have the characteristics of cash”. This is just one of the many facets of how accounting for cryptoassets – a digital asset class that includes assets recorded on a blockchain such as cryptocurrencies – is complex and could require significant judgement.

In order to address the uncertainty potentially faced by the Singapore accounting profession in the accounting for cryptocurrencies and other types of cryptoassets, ISCA, through its Financial Reporting Committee (FRC) and FRC Core Sub-Committee, issued Financial Reporting Guidance 2 (FRG 2) “Accounting for Cryptoassets: From a Holder’s Perspective” on 5 March 2020. Guidance on accounting for cryptoassets from the issuer’s perspective will be the subject of a separate FRG expected to be issued at a later date.


Knowing the developments leading up to this point could be helpful to understand the purpose of FRG 2. When cryptocurrencies were first created in 2009, it was envisioned that they would provide potential benefits that enable them to be used as an alternative payment method or for financing. Since then, trading volume for the more reputable cryptocurrencies has increased significantly in recent years, even as viable solutions for their inherent limitations continue to be sought so they can be used as a transaction currency. At the same time, the continued evolution in cryptocurrencies has resulted in the development of digital tokens that provide functions other than payment and given rise to cryptoassets as a new digital asset class.

As cryptoassets grow more complex, entities that transact in cryptoassets will need to ensure that the related accounting and disclosures in the financial statements are appropriate and adequate to meet the informational needs of stakeholders. However, a potential roadblock is that cryptoassets are not explicitly within the scope of any IFRS Standard. In addition, the International Accounting Standards Board decided “to monitor the development of cryptoassets” and “not to add to its work plan a project on holdings of cryptocurrencies or initial coin offerings” due to the lack of prevalence of such transactions for entities that report using IFRS Standards. Nevertheless, in June 2019, some clarity on this matter was provided in the aforementioned agenda decision by IFRIC on the holdings of cryptocurrencies, a subset of cryptoassets.

ISCA’s FRC deliberates over issues which are likely to result in divergent or unacceptable treatment, are pervasive or relate to complex accounting areas. FRGs are issued under the ISCA Financial Reporting Codification Framework to help in the application of accounting standards by explaining how the principles and requirements in the accounting standards apply to these issues. Hence, FRG 2 was issued to guide preparers who report under the Singapore Financial Reporting Standards (International) (SFRS(I)s), International Financial Reporting Standards (IFRSs) or Financial Reporting Standards (FRSs) issued by the Accounting Standards Council, on the accounting for holdings of cryptoassets.


The following are some key highlights of FRG 2.

FRG 2 gives an overview of cryptoassets in the following areas:

  • What is a cryptoasset?
  • What are the different types of cryptoassets?
  • What are the relevant guidelines and regulations on cryptoassets in Singapore?

In addressing the accounting for cryptoassets by the holder, FRG 2 provides guidance, together with illustrative examples. The table below sets out a possible decision process to apply the most relevant FRS in accounting for a particular cryptoasset.

Table 1 A Possible Decision Process To Apply The Most Relevant Frs In Accounting For A Particular Cryptoasset

FRG 2 highlights that there may be cryptoassets which have terms and conditions and/or other characteristics that may not fit the general definition of any type of cryptoasset. The accounting for holding cryptoassets depends on the facts and circumstances of each individual case and may require the use of judgement with emphasis placed on the substance of the transaction over its form. Auditors or professional advisors should be consulted if necessary.


Perhaps the emergence of cryptoassets is just one instance of how technological disruptions, along with other global developments, provide new challenges in classification and measurement and are extremely relevant to the accountant. Beyond just quantification in financial reporting, it is also emblematic of the constant need for accountants to understand and adapt to these developments. For example, blockchain, which was invented to enable cryptocurrency transactions, is now being evaluated by enterprises and governments alike for other significant applications, such as automated contracting, and is at the forefront of digital transformation. In adapting to these developments, the accountant positions himself to contribute his knowledge, judgement and insight, and rises up the value chain in the organisation.

ISCA will continue to support the development needs of members, such as by guiding members in meeting financial reporting challenges via the FRC.

Lim Ju May is Deputy Director, Technical, ISCA, and Donaphan Boey is Manager, Financial & Corporate Reporting, Technical, ISCA.