Last updated on 30 July 2026
Under IFRS, cryptocurrencies are often classified as intangible assets and assessed at cost or fair value, depending on the company’s accounting policy.Cryptocurrencies like Bitcoin and Ethereum have gone from niche technology to mainstream financial assets. As more individuals and companies hold crypto, questions around financial reporting and cryptocurrency valuation have become increasingly important. More than 140 countries use the International Financial Reporting Standards (IFRS), which guide how companies should report digital currencies in their books.
What Are Cryptocurrencies Under IFRS?
The majority of cryptocurrencies are currently classified as intangible assets under IAS 38. So, accountants must work within existing standards to decide how to account for crypto assets and determine their appropriate cryptocurrency valuation.
At present, IAS 38 (Intangible Assets) generally classifies cryptocurrencies as intangible assets, given they lack physical substance and are not considered financial instruments under current accounting standards. That means they are:
- Non-monetary
- Without physical substance
- Identifiable
This treatment applies because most cryptocurrencies do not give rights to cash or other financial assets, so they do not meet the definition of financial instruments under IFRS 9.
However, if a business actively trades cryptocurrencies, like an exchange or a broker, it may be possible to classify them as inventory under IAS 2, using the fair value model — impacting the cryptocurrency valuation approach taken.
Two Main Ways to Value Cryptocurrency Under IFRS
Depending on how the crypto is classified, there are two main valuation models that affect the cryptocurrency valuation:
- Cost Model (under IAS 38)
In the cost model, the company records the asset at its purchase cost and deducts any accumulated amortisation or impairment losses
Company A buys 10 Bitcoin for £200,000. It records it as an intangible asset at £200,000. If the price later drops significantly, the company may need to record an impairment loss, affecting the overall cryptocurrency valuation.
- Revaluation Model (under IAS 38)
If an active market exists for the crypto asset (which it does for major coins like Bitcoin or Ethereum), companies can choose to use the revaluation model. This means valuing the crypto at its fair value at the reporting date, with changes going to equity.
“Note: The company can use this option only if it adopts the revaluation model as its accounting policy and relies on available, reliable market prices.
Fair Value Measurement and IFRS 13
The price that would be earned to sell an asset in a peaceful exchange between market participants on the measurement date is known as fair value. This definition is outlined in IFRS 13.
IFRS 13 introduces a three-level hierarchy to determine fair value:
- Level 1: Prices quoted in active markets (e.g., Bitcoin on Binance)
- Level 2: Inputs that are not part of the quoted prices for the same assets or liabilities but are based on observable market data
- Level 3: Unobservable inputs (used when markets are illiquid)
For most cryptocurrencies, Level 1 inputs are available, making fair value measurement more reliable.
How a Company Might Report Crypto?
Let’s say a UK-based company holds £500,000 worth of Ethereum as part of its investment portfolio. They use the fair value model. At year-end, the price has increased, and the total value is now £650,000.
They report the Ethereum at £650,000 on the balance sheet. The company records the unrealised gain of £150,000 in other comprehensive income, not through the profit and loss account—unless it sells the asset.
If the company uses the cost model instead, it continues to show the Ethereum at £500,000 unless it identifies an impairment.
What About Losses?
Cryptocurrencies are highly volatile. Under IAS 36, if the asset’s recoverable value falls below its carrying amount on the balance sheet, companies must recognise the difference as an impairment loss.
This rule becomes especially important under the cost model, where companies cannot recognise gains unless they sell the asset, but must record losses as soon as impairment occurs.
Disclosures Required Under IFRS
Transparency is essential. Companies must disclose:
- The accounting rules that were applied
- Whether the fair value or cost model was used
- The amount of crypto held
- Fair value hierarchy levels (if applicable)
- Any impairment losses or gains
This ensures stakeholders, auditors, and regulators can understand the financial impact of digital assets.
Recent Developments and Debate
Whether cryptocurrencies require their own reporting standard has been a topic of discussion among the International Accounting Standards Board (IASB). For now, the treatment under IAS 38 remains the default.
The U.S. FASB recently moved toward fair value accounting for crypto, creating momentum for IFRS to consider a similar approach. But as of 2025, there have been no modifications made to IFRS that particularly target cryptocurrency.
Why It Matters?
How crypto is valued on financial statements affects everything:
- Investor decisions
- Tax reporting
- Compliance with regulators
- Loan agreements or investor covenants
Incorrect classification or valuation can lead to misstated accounts and, in some cases, penalties.
Final Thoughts
Valuing cryptocurrency under IFRS isn’t as complicated as it seems, but it does require careful judgment. You need to consider what kind of business you run, how you use crypto, and whether you want to value it at cost or fair value.
The goal is to reflect the economic reality of your holdings while staying compliant with accounting standards.
Better regulations might emerge if cryptocurrency becomes more ingrained in international finance. But for now, IFRS offers enough flexibility, if you know how to use it.
Need Help With Crypto Accounting?
If you are an investor, a startup, or an established business, Crypto Accountants can help you handle your crypto reporting with confidence. We offer clear guidance, full IFRS compliance, and peace of mind.
Contact Crypto Accountants today to ensure your crypto financial statements are accurate, compliant, and future-ready.
People Also Ask
Can cryptocurrency be classified as cash or a financial asset under IFRS?
No. Since cryptocurrencies are not legal tender and do not represent a contractual right to cash, they do not meet the definitions of cash or financial instruments under IFRS.
Is Bitcoin always an intangible asset under IFRS?
For most companies, yes. However, if you’re trading Bitcoin as part of your business model (e.g., a crypto exchange), it might be classified as inventory under IAS 2.
If I just have a small amount of cryptocurrency, can I still use fair value?
Yes, as long as there is an active market and your accounting policy allows for it. The key requirement is the availability of reliable market prices.
Does HMRC follow the same approach?
HMRC has its own tax rules and does not always align with IFRS accounting treatment. It’s important to separate financial reporting from tax reporting.
