Accounting For Cryptocurriencies.

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Presentation Layout:

1. What are Cryptocurrencies?

2. Why is Cryptocurrency Accounting more Challenging Than Traditional Accounting?
3. Treatment In Financial Statements?
4. Crypto Tax Overview: Basics of Crypto Tax filing in the USA.
5. What is the current status of Cryptocurrency in Bhutan?
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Cryptocurrencies is a digital or virtual currency that uses Cryptography for the secure transaction and

can be used for online Transactions, Investments, international money Transfers and Smart contracts.

Why is Cryptocurrency Accounting more Challenging Than Traditional Accounting?

 Volatile in Nature

Cryptocurrencies exhibit extreme price volatility, unlike traditional currencies, making accurate

valuation and recording of transactions challenging.

Rapid and significant fluctuations in crypto currency values impact financial reporting and balance

sheets, complicating accounting processes.

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 Lack of Standardized Accounting Principles

The absence of universally accepted accounting principles for crypto currencies leads to
inconsistencies in financial reporting practices.
The decentralized nature of crypto currencies hinders the establishment of common frameworks like
GAAP or IFRS, complicating comparisons across the industry.

 Transaction Volume and Automation

High transaction volumes on block chain networks require specialized accounting software for real-
time recording and categorization of financial activities.
Traditional manual and semi-automated accounting methods struggle to keep up with the rapid pace
and volume of cryptocurrency transactions.

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 Security and Safeguarding Digital Assets

Cryptocurrencies digital nature exposes them to hacking and cyber attacks, necessitating robust security
measures to protect digital holdings.
Accountants must ensure secure storage and management of cryptocurrency assets while maintaining
accurate records, adding complexity to accounting practices.

Treatment in Financial Statement .

Cryptocurrencies as Intangible Assets.
Initially recorded at cost. Value adjusted by subtracting amortization and losses due to value drops.
Increase in value after a drop is considered income, while losses are recognized immediately.
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Cryptocurrencies as Inventory

Recorded at the lower of cost or net realizable value.

Cost includes direct expenses like mining costs and overhead expenses.
Reduction in value recognized as an expense.

Crypto currencies as Cash Equivalents

Measured at fair value.

Changes in value impact the income statement, reflecting gains or losses.

Crypto Tax Overview: Basics of Crypto Tax filing in the USA.

In U.S the IRS (Inland Revenue service in the British government context) classifies money you make from
crypto as taxable income, subject to specific tax rates depending on the nature of crypto activities and how
long you’ve held. To determine if you owe taxes on your crypto, you should distinguish between taxable and
non-taxable events.
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Non-taxable events :
Buying and holding crypto currency with cash.
Donating crypto currency to qualified charities.
Receiving crypto currency as a gift (though taxes may apply when later sold).
Transferring crypto currency between your own wallets/accounts.

Taxable as income:
Payment and services.
Mining and staking Rewards.

Taxable as Capital Gain.

Selling For Profit.
Exchanging Crypto.
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Bhutan is making a bold venture into the world of crypto currency, specifically Bitcoin mining, to
boost its economy. Bhutan has reportedly been mining Bitcoin since at least 2017, utilizing its
abundant hydroelectricity resources to establish a state-owned bit coin mine.

In 2023, Druk Holding and Investments (DHI), Bhutan's sovereign wealth fund, announced a $500
million partnership with Singapore tech company Bitdeer to mine Bitcoin in the country for sale
abroad.

The Royal Monetary Authority of Bhutan, the country's central bank, has issued public notifications
cautioning the public about Pi crypto currency, reminding them to exercise due diligence and
prudence when investing in any crypto currency. The RMA is closely monitoring the developments
of crypto currencies and their implications on the economy and financial systems.