Blockchain and Accounting — The Basis 1

Blockchain and Accounting — The Basis 1

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End of the year 2018 is approaching. All the companies involved in blockchain that have a fiscal year equal to the calendar year will soon have to close books for 2018.

Our company involved in crypto works in four different jurisdictions. Luckily we get to submit end of the year report to Swiss authorities only. They seem to be the most reasonable ones in Europe.

In order to introduce the crypto economy into the “old” economy, we have to understand how existing accounting standards qualify different crypto projects.

1.Asset or Liability
Depending on the content(crypto project) accountant has to qualify crypto as:

– currency
– contract
– prepayment/advance payment
– bond
– share
– hybrid financial instrument
– option (put/call)
– insurance contract
– goods
– energy


– loan
– lease
– hybrid financial instrument

2. Income

Goods we sell in tokens. Local accounting needs to be in local or at least FIAT currency.

Which value of token should I take?
If you received tokens and if sold them for crypto or other tokens — use value on the date on which you have sold tokens

If you have kept tokens till the end of the year use end of the year value(on the exchange if the token is listed) of token you are keeping.

What if the token is not on a market or exchange?
Use purchase price of the token(if not available use estimate).

3. Expenses

Services we paid in our tokens —do these services qualify as an expense or not?

Yes, they are expenses. Value them in local currency at the exchange rate on the day of the payment.

NOTE: I’m writing about expenses need to do the business.

4. Proprietary token

The company has issued its own token — is this asset or liability?

Unsold tokens(if usable) are an asset
Sold tokens are a liability

Use market price in local currency for accounting.

What if the token is not on a market or exchange?
Use average sales price of the token(if not available use estimate).

Remember: Keep it simple and well documented!

Blockchain and Accounting — The Basis 1 was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.