New rules in cryptocurrencies aim to stimulate innovation
Ms Dimitra Mitziviri, a graduate of the University of Thessaly , and an accountant in a private company, explaining to the cryptocurrencies, many interesting issues and solving several questions. There is a central authority, that controls cryptocurrencies to make a transaction, what is the accounting approach of this investment tool, how could the Cryptocurrency Accounting Approach to Greece manage them, how could the European Union manage the use of cryptocurrencies in general. These are questions that, she answers, somehow clarifying the “confused” is the truth in cryptocurrencies.
What are cryptocurrencies?
Cryptocurrencies are a decentralized electronic form of money, through a network that allows two or more computers to share their resources equivalently and substantially and rely on the principles of cryptography to ensure the network and verify transactions.
Is there a central authority that controls the cryptocurrencies to make a transaction?
The cryptocurrencies do not have any defined central authority, which controls to make a transaction. On the contrary, most cryptocurrencies use a distributed database as the pillar of their system, the so -called blockchain. The main characteristic of cryptocurrency is its decentralized nature and through it its resilience to any form of effort to control and intervene.
What could be the accounting approach of this new investment tool?
In my opinion, cryptocurrencies can be ranked accounting as financially in fair value through results, as the majority of the financial world are in favor of this view. And this is because, the fair value is the value in which the holders of cryptocurrencies will either liquidate their investment or they can deal with goods and services.
Could you tell us some other types of accounting rankings related to cryptocurrencies and develop a few words about each one?
A category, which is capable of positive response from the global accounting community, is the intangible elements of active definition. Intangible assets are considered non -monetary elements without physical existence. Digital coins are deprived of a) natural status, b) are recognizable separate and c) these are non -monetary elements because they do not meet the definition of money/cash. Consequently, they appear to meet the definition of intangible assets. In addition, another category of ranking could have been cryptocurrencies of physical assets, which practically means that one could consider cryptocurrencies as material elements of assets. However, according to the data so far, which we know , is that the tangible immobilizations, investment properties and stocks refer to physical data with natural status, which are in contrast to the nature of cryptocurrencies( that they have no physical substance). In this sense, digital currencies do not meet the definition of assets with natural status.
One last possible approach, is perhaps more widespread, of cash and equivalent cash in the sense that the first category we might have thought, is integrating them in cash and cash equivalents. Cash exists in the form of banknotes or coin, are issued and supported by a government as a legal means of trading. On the contrary, digital currencies do not valued their value in gold, are not issued by a central bank, not supported by a government. In addition, cash equivalents are short -term high -liquidity investments, which are directly convertible to known amounts of cash and which have insignificant risk of changing their value. However, we realized, that cryptocurrencies in relation to the above definition have no expiration date and have a significant risk of changing their value, which implies their discrepancy with the definition of equivalent cash.
How could Greek law manage the accounting approach of cryptocurrencies?
Based on the Accounting standards board’s (SLOT)opinion, cryptocurrencies can be dealed accounting as follows: (a) as a stock, if intended for sale in the usual activity of the entity. In this case, both in the context of the IFRS and in the context of the Greek accounting standards, it is valued at the costs (acquisition costs minus accumulated impairment losses), (b) as an intangible asset, provided that it is held as an investment. In any case, it is required to notify the accounting rules followed by the entity to face the digital currency .
How could the EU generally manage the use of cryptocurrencies?
The use of cryptographic elements-cryptocurrencies and their technology have proven to be extremely promising and at the same time problematic. That is why, the EU processes rules that will help to stimulate the development of these technologies and their use in the EU, while protecting users. The EU is processing new rules, that regulate the markets of cryptocurrency assets to enhance the capabilities of cryptocurrencies and to reduce possible threats. An agreement, was achieved, by Parliament and the Council in June 2022, and was officially approved by Parliament in April 2023 and EU countries in the Council in May 2023, which was the last step in the legislative process. In order to, encourage the development and use of these technologies, the new rules aim to stimulate innovation, while safeguarding financial stability and protecting investors and consumers from dangers.
