With the rapid rise of cryptocurrencies and digital assets, more and more companies are exploring these new forms of value. Yet accounting for digital assets remains unfamiliar and complex for many. As a chartered accountant specialising in digital assets, I want to shed light on this key topic so that finance teams can manage it rigorously and in compliance with regulations.

The importance of rigorous accounting for crypto transactions

Every transaction involving digital assets must be recorded just as you would for a traditional bank statement. You would never overlook a small commission on a bank statement; the same discipline applies to crypto transactions.

Qualifying each operation

It is crucial to define and qualify every transaction:

• Staking: Participating in transaction validation on a blockchain in exchange for rewards.
• Trading: Buying and selling digital assets to generate gains.
• Supplier/client payments: Using cryptocurrencies as a payment method.
• Airdrop: Receiving tokens for free, sometimes without solicitation.

This qualification determines the appropriate accounting treatment for each transaction.

Capital gains and losses: methods and rules

Whenever a digital asset leaves the portfolio, you must calculate a gain or loss. Two methods are generally accepted:

• Weighted Average Cost (WAC): Smooths asset values by calculating an average acquisition cost.
• First In First Out (FIFO): The first assets acquired are deemed the first ones disposed of.

Once you choose a method, it must be applied consistently over time. The continuity-of-methods principle is fundamental in accounting and prevents arbitrary changes that could distort financial results.

Traceability: a major priority

Operational traceability is essential to ensure the integrity of accounting data:

• Use the original export files from platforms: avoid files that clients have altered, as they may omit critical transactions.
• Keep supporting evidence: store transaction statements and related documentation.

The specific case of unsolicited airdrops

Unsolicited airdrops raise a particular challenge:

• Negligible value: These tokens often have a minimal value.
• Security risk: Interacting with them can expose users to security breaches or scams.

Our recommendation: record these airdrops at a symbolic value of €0.01. This helps to:

• Ensure the asset appears in the books.
• Prevent surprises: if the airdrop appreciates or the client sells it later, the operation is already recorded.

Understanding the client’s management intent

It is crucial to understand how the client intends to manage their digital assets:

• Long-term holding: The asset is kept in anticipation of future appreciation.
• Frequent trading: The asset is actively traded.

This intent influences how the asset is classified and its tax treatment.

Conclusion

Accounting for digital assets is complex but unavoidable for companies active in the crypto ecosystem. A rigorous, methodical approach is critical to:

• Comply with legal and tax obligations.
• Optimise the company’s financial management.
• Prevent risks linked to omissions or accounting errors.