Publication details

Can Fiat-backed Stablecoins Be Considered Cash or Cash Equivalents under International Financial Reporting Standards Rules? (UNDER REVIEW)

Authors

HAMPL Filip GYÖNYÖROVÁ Lucie

Year of publication 2020
Type Article in Periodical
Magazine / Source Australian Accounting Review
MU Faculty or unit

Faculty of Economics and Administration

Citation
Keywords analysis of distribution; cryptocurrencies; financial reporting; international accounting; value at risk; volatility
Description Stablecoins are newly discussed and rapidly evolving subcategory of cryptocurrencies which aims to reduce the price fluctuations of traditional cryptocurrencies and thus become a common payment instrument. The aim of the paper is to assess the material substance of fiat-backed stablecoins and answer the question whether fiat-backed stablecoins could be considered and thus reported in financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as cash or cash equivalents. The qualitative analysis of selected stablecoins and the quantitative analysis of their risk characteristics in comparison to fiat currency pairs, money market indexes and instruments and traditional cryptocurrencies have been performed. The results of the three-step approach analysis prove that some of them meet the definition of financial assets as well as other IFRS criteria to be reported as cash equivalents. However, the inconsistency of existing IFRS requirements with the principle ‘substance over form’ has been identified. This study can enhance the understanding of the material substance of fiat-backed stablecoins for their financial reporting and can be used by accounting units that own stablecoins when creating accounting policies under the existing IFRS rules and by accounting standard-setters as a clue to form new rules or interpret the existing ones.
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