Intangible Asset

According to IAS 38 Intangible Assets, the asset class is defined as an ‘identifiable non-monetary asset without physical substance’ — identifiable meaning that the asset is separable or is derived from a contractual/legal obligation. In this context, an asset is ‘separable’ if it can be traded or exchanged for individually.


When an entity holds cryptocurrencies for sale in the ordinary course of business (most notably, as a broker-trader seeking profits from price fluctuations), it falls under the jurisdiction of IAS 2 Inventories to be accounted as inventories of intangible assets. They are to be measured at fair value less costs to sell.

Financial Assets & Cash

Contrary to popular belief, cryptocurrency does not qualify as a financial asset or cash due to several conflicting reasons. First and foremost, two attributes of a financial asset outlined in IAS 32 Financial Instruments — Presentation are that the asset in question embodies the properties of cash and entitles the holder to certain financial obligations arising from it. Cryptocurrencies do not meet both conditions.


Having experienced significant technological advancements within the field, cryptocurrencies now come in different forms, each with fundamental distinctions in terms of the asset’s essence. Three categories — payment tokens, security tokens, and utility tokens — exist, and the IRD states that its taxation treatment would depend on which form of cryptocurrency is involved.

Nature Of Holdings

When it comes to holding cryptocurrencies, the IRD divides holders into two broad classifications — those holding for long-term investment, and those for carrying on a trade or business. For the former which mainly involves exchange platforms or ICOs, the tax eligibility of profits arising from a digital assets’ disposal would depend on whether the digital asset is capital in nature or meets the characteristics of trading stock.



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