Cryptocurrency in public and commercial entities : financial risk and valuation
Kuusisto, Jani (2022)
2022
Hallintotieteiden maisteriohjelma - Master's Programme in Administrative Studies
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2022-01-25
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202201041066
https://urn.fi/URN:NBN:fi:tuni-202201041066
Tiivistelmä
Cryptocurrencies, such as bitcoin, have received extensive public attention. Cryptocurrencies are digital assets built on blockchain technology and openly traded on online exchange platforms. The cryptocurrency market´s rapid growth has encouraged corporate and governmental entities to trade and utilize cryptocurrencies.
Appearance of bitcoins and other cryptocurrencies in annual reports has created a need for new accounting guidelines addressing presentation and valuation of cryptocurrencies. This study intends to find out how different accounting standards address this need.
Risks are central to valuation of crypto assets. The study explores the cryptocurrency risks through the concept of financial risk, which is the sum of different risk dimensions perceived in cryptocurrencies. The goal is to figure out whether new risks have appeared by finding an intersection between academic literature and organizational reporting. Findings will reveal whether cryptocurrency risks have increased or decreased.
The study found out that there is some degree of consensus on valuation of cryptocurrencies as commodities in international accounting standards and annual reports of private companies. Presentation styles vary widely, but there were similarities in the valuation of cryptocurrencies across companies. Impairment testing was used to determine the fair value of cryptocurrencies in the companies. While the testing method was the same, the companies differed on their purposes for using cryptocurrencies, which led them to emphasize different accounting standards depending on the use.
While the corporate world and the governments are starting to use cryptocurrencies, it exposes them to new kind of risks that were left to less attention in pre-2018 academic literature. While some regulation has been enacted, lack of regulation and uncertainty how cryptocurrencies will be regulated remains a risk both in the academic literature and in the annual reports of the companies.
Applicability of international accounting standards on cryptocurrencies is still being actively worked on. There are still many gaps in the cryptocurrency risk literature. The academic literature seems to lag behind the corporate world in its discovery and analysis of the most relevant cryptocurrency risks. Cryptocurrencies are being innovated at rapid rate, which entails investigation in organizations using cryptocurrencies to receive the most updated perspective on the field.
Appearance of bitcoins and other cryptocurrencies in annual reports has created a need for new accounting guidelines addressing presentation and valuation of cryptocurrencies. This study intends to find out how different accounting standards address this need.
Risks are central to valuation of crypto assets. The study explores the cryptocurrency risks through the concept of financial risk, which is the sum of different risk dimensions perceived in cryptocurrencies. The goal is to figure out whether new risks have appeared by finding an intersection between academic literature and organizational reporting. Findings will reveal whether cryptocurrency risks have increased or decreased.
The study found out that there is some degree of consensus on valuation of cryptocurrencies as commodities in international accounting standards and annual reports of private companies. Presentation styles vary widely, but there were similarities in the valuation of cryptocurrencies across companies. Impairment testing was used to determine the fair value of cryptocurrencies in the companies. While the testing method was the same, the companies differed on their purposes for using cryptocurrencies, which led them to emphasize different accounting standards depending on the use.
While the corporate world and the governments are starting to use cryptocurrencies, it exposes them to new kind of risks that were left to less attention in pre-2018 academic literature. While some regulation has been enacted, lack of regulation and uncertainty how cryptocurrencies will be regulated remains a risk both in the academic literature and in the annual reports of the companies.
Applicability of international accounting standards on cryptocurrencies is still being actively worked on. There are still many gaps in the cryptocurrency risk literature. The academic literature seems to lag behind the corporate world in its discovery and analysis of the most relevant cryptocurrency risks. Cryptocurrencies are being innovated at rapid rate, which entails investigation in organizations using cryptocurrencies to receive the most updated perspective on the field.