In a decisive move to prevent a recurrence of the WEMIX accounting controversy, the South Korean government has prepared new guidelines for accounting virtual assets.
The South Korean National Assembly’s adoption of the Virtual Assets Act has caused the government to improve accounting transparency for virtual asset transactions, allowing businesses that issue or hold virtual assets to report clear and comprehensive information.
The exposure draft for updating Corporate Accounting Standards No. 1001, which includes required disclosure requirements for virtual assets and establishes rules for the accounting treatment of virtual assets, was evaluated and accepted by the South Korea Financial Services Commission on July 11.
Following the National Assembly’s recent adoption of South Korea’s Virtual Assets Act, plans are being made to apply new regulations. A review by the Korean Accounting Standards Board has been prompted by the Financial Services Commission’s (FSC) announcement of a change to the nation’s Corporate Accounting Standards.
These actions are being implemented to establish thorough regulations for virtual assets in the nation. The recently enacted regulations mandate that cryptocurrency issuers in South Korea make significant disclosures in their financial filings.
These disclosures will cover various topics, such as internal accounting procedures, cryptocurrency token sales information, and token holdings facts. The regulations will also apply to businesses that handle bitcoins.
The inability to classify the costs of creating virtual assets and associated platforms as intangible assets presents another accounting problem connected to virtual assets.
Companies must evaluate their virtual assets every year to see whether there has been any diminution in their intrinsic worth because these development activities need to match the requirements of the intangible assets standard.
On a global scale; the United States has taken moves to enact fair-value accounting principles, despite not having established accounting standards for virtual assets.
According to the plan unveiled in February of this year, public and private businesses must now distinguish between their crypto assets and intangible assets like patents while preparing their financial statements.
The company must also disclose the gains and losses on any crypto assets that contribute to a company’s net income. Despite the proposal, the International Accounting Standards Board (IASB) has chosen to publish guidance rather than implement accounting standards, particularly for virtual assets.
Obvious regulation, including how digital assets are classified and taxed, is required for the widespread adoption of cryptocurrencies, as was made evident by the July 13 United States District Court decision that XRP is not a security.
