Cryptocurrency Accounting for Business Owners: How It Works Under IFRS

Cryptocurrencies like Bitcoin and Ethereum are becoming more common in business. Companies may accept crypto as payment, hold it as an investment, or trade it. But one question many business owners ask is simple: how should cryptocurrency appear in company accounts?

International accounting standards (IFRS) provide guidance on this. The key point is that cryptocurrencies are not treated like normal money in accounting.

Below is a simplified explanation of how businesses usually record crypto assets.

1. Cryptocurrency Is Not Considered Cash

Even though people sometimes use crypto to pay for goods or services, accounting rules do not treat cryptocurrencies as cash. Why? Cash normally means government-issued money (like euros or dollars) that is widely used for pricing and payments. Cryptocurrencies are still too volatile and not widely used enough to be classified this way.

So in accounting terms, crypto (except stable coins) is treated as an asset rather than money.

2. Most Businesses Record Crypto as an Intangible Asset

For most companies, cryptocurrency is recorded as an intangible asset. An intangible asset is something valuable that doesn't physically exist, such as:

• software

• patents

• trademarks

• digital assets like cryptocurrency

When a business buys crypto, it records the value at the price paid at the time of purchase.

Example:

A company buys €5,000 worth of Bitcoin. The accounts show an intangible asset worth €5,000.

3. What Happens When the Price Changes?

Cryptocurrency prices change frequently. Accounting rules treat increases and decreases differently:

• If the value drops the company may need to record an impairment loss, meaning the asset is written down to its lower value.

• If the value rises in many cases, the increase is not recorded immediately unless the asset is sold or a special valuation method is used.

This can sometimes make company accounts look more conservative than the real market value.

4. When Crypto Is Treated Like Inventory

Some businesses operate in the crypto market itself. For example:

• crypto exchanges

• trading platforms

• broker-dealers

If a company buys and sells cryptocurrency as part of its normal business, the crypto may be treated as inventory, similar to products held for resale. In that case, it is recorded like stock and valued based on selling price.

5. Why This Matters for Business Owners

If your company holds cryptocurrency, the accounting treatment affects financial statements, profit reporting and tax calculations.

Because crypto prices move quickly, businesses also need good tracking systems to record purchase prices, sales, and market value.

Simple Summary

For most businesses under IFRS:

• Cryptocurrency is not cash

• It is usually recorded as an intangible asset

• Businesses trading crypto may treat it as inventory

• Price drops may affect profits through write-downs

Cryptocurrency is still a relatively new asset class, and accounting rules are continuing to evolve. If your business holds or accepts crypto, it’s important to work with advisors who understand both digital assets and financial reporting.