The International Financial Reporting Interpretations Committee (IFRIC) has reclassified digital coins, nominally Bitcoin (BTC), deeming it not to be bound by the definition of financial assets or legal tender.
As reported by the Korea Times on September 23, during a discussion took place in June this year, the IFRIC has finalized cryptocurrency definition as “not cash nor an equity instrument of another entity,” but rather “intangible assets” – “identifiable non-monetary assets without physical substance”.
Per the IFRIC, a digital asset can be considered identifiable if it can be separable, or arises from contractual or different legal rights.
“capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability.” – the term “separable” was further explained in details.
As stated in the report, the new take on digital currency from the IFRIC will give governments from different nations grounds to form a legal basis for taxation, along with giving companies the incentive to map out frameworks for corporate accounting.
Nonetheless, as also notified by the Korea Times, a sign of setback can be inferred from the IFRIC’s take on digital coins, concerning prospective recognition or status as currencies.