The International Financial Reporting Interpretations Committee (IFRIC) has defined that all the cryptocurrencies are intangible assets and doesn’t fall under the legal tender.
The IFRIC affirmed this decision after an official meet in London on September 23.
The Korea Accounting Institute confirmed that the IFRIC had framed this decision under the authority of the International Accounting Standards Board (IASB) during the meeting held in June.
It is noteworthy that IASB is an international organization established to determine international financial standards (IFRSs) recognized across 130 countries.
When was it originated?
The decision has been under consideration right from March. The accounting authorities devised that the cryptocurrencies should be considered as ‘intangible assets’ or ‘inventory assets’ as the cryptocurrencies are separable from the holder and can be sold or transferred individually. Further, they do not guarantee the holder to receive regulated units of currency.
The International Financial Reporting Interpretations Committee (IFRS)
The IFRS is a globally recognized not-for-profit organization that determines accounting standards (IFRS Standards) in favor of public interests. These standards are being decided by the IFRS foundation’s standard-setting group of members – the International Accounting Standards Board.
Digital Currencies neither financial assets nor Currencies
IFRC has defined cryptocurrency as “Separable identifiable non – monetary assets without physical substance.”
As per the definition, businesses will now have to consider cryptocurrencies as an intangible asset in accounting practices.
Impact on South Korea
According to Korean sources, the IFRIC’s stand on digital-currencies will authorize the government to establish a legal basis for taxation on cryptocurrencies. The decision is already under consideration by the Korean Ministry of Strategy and Finance to bring cryptocurrency under taxation, refuting it as a financial product.
South Korea’s earlier stand on crypto taxation
In response to the growing trade value of Bitcoin, The Commissioner of National Income Tax Service- Han Seung-hee had expressed the possibility to impose a tax on Bitcoin.
He was also chalking out roots to connect Bitcoin’s trading value with various tax structures.