Global Accounting Committee Defines Cryptocurrency As Intangible AssetsAuthor: Ali RazaLast Updated: 24 September 2019 Regulatory bodies across the world are working on developing frameworks for cryptocurrencies.Digital assets are moving into mainstream adoption, and concerned authorities recognize the need to create proper guidelines for the use and definition of the asset class.The International Financial Reporting Interpretations Committee (IFRIC) has said that cryptocurrencies are neither financial assets nor cash.The committee says that the asset class falls under intangible assets accusing to their standards. Reports suggest that the IFRIC came to this decision after a meeting that took place in London in June this year.IFRIC defines crypto assetsIFRIC is one of the most influential bodies in the accounting industry, and it sets the International Financial Reporting Standard (IFRS). The committee published a document, dated June 21, in which it defines cryptocurrency as an intangible asset.This definition has been made on the basis that digital assets are capable of being separated from their holder through being sold or being transferred, and it does not give the holder a right to receive a fixed number of units of currency.The committee described intangible assets as non-monetary assets that have no physical substance. The accounting committee concluded that cryptocurrency could not be defined as equity, and it does not give a holder contractual rights of exchange.Due to the fact that cryptocurrency is not a medium of exchange in a practical set up, it can not be defined as cash.Further explaining their definition of crypto, IFRIC said that there are cases in which the asset class can be defined as inventory.If a user or an entity possesses the assets for sale in the ordinary course of business, they could be classified as part of the business’ inventory.Future treatment of cryptocurrencyAlthough the committee has published this definition, it does not automatically become an actual rule. It is merely a reflection of the committee’s thinking with regards to cryptocurrency.The committee is yet to add this clause to its ordinances governing the treatment of cryptocurrency.However, the committee tends to follow through on the standards that it sets. The committee is highly influential, and its rules are followed in 144 jurisdictions.Public companies in South Korea, Singapore, many parts of Europe are required to adhere to the committee’s standards in their practice.The US makes use of the regulations as a part of its generally accepted accounting principles (GAAP). If IFRIC eventually states its position as a part of its rules, it will change the way that crypto assets are viewed and treated across the world.