As cryptoassets (such as cryptocurrencies, tokens and other digital assets) become more widely held by companies, traditional accounting methods face new challenges. Because of this shift, recognizing and reporting cryptoassets correctly under prevailing Singapore accounting standards is critical.
Why Cryptoassets Aren’t Treated Like Cash or Securities
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Cryptoassets (e.g., Bitcoin, Ethereum) are not considered cash or cash equivalents under the accounting standards in Singapore (SFRS(I) 1-7), because they are not legal tender and lack wide acceptance.
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They also do not qualify as “financial assets” under SFRS(I) 9, since holders do not have contractual rights to receive cash or another financial asset.
Types of Cryptoassets and Their Accounting Treatment
According to guidance from Institute of Singapore Chartered Accountants (ISCA) — through FRG 2 – Accounting for Cryptoassets from a Holder’s Perspective — cryptoassets are broadly classified into four types. Each type may require different accounting standards depending on how the asset is used or held:
| Type | Description |
|---|---|
| Cryptocurrency | Digital currencies used as a medium of exchange or store of value. |
| Utility Token | Tokens that grant access to specific services or products on a blockchain platform. |
| Asset Token | Tokens that represent ownership of a physical or financial asset (e.g., real estate, commodities). |
| Security Token | Tokens representing equity or debt interests — similar to traditional securities (e.g., shares, bonds). |
How they are accounted for
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Cryptocurrencies — If held for trading (e.g. by a broker-trader), they may be treated as inventory under SFRS(I) 2. Otherwise, they are usually classified as intangible assets under SFRS(I) 1-38.
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Utility Tokens — Depending on use case, may be treated as inventory, intangible assets, prepayments, or financial instruments under relevant standards (SFRS(I) 2, SFRS(I) 9, SFRS(I) 16, etc.).
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Asset Tokens — Accounting depends on the nature of the underlying asset represented; relevant standards for that underlying asset apply.
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Security Tokens — If they meet the definition of a financial asset under SFRS(I), then SFRS(I) 9 applies, with measurement and disclosure according to that standard.
What This Means for Businesses
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Companies holding cryptoassets must assess the nature and intended use of each token before deciding on accounting treatment. Substance and economic reality matter more than form.
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Because cryptoassets don’t fit neatly under “cash” or “traditional financial assets,” firms must rely on existing accounting standards and professional judgment — which can vary case-by-case.
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Transparent classification and consistent application of standards — such as those recommended by ISCA — are vital for accurate financial reporting and investor confidence.
Conclusion
Cryptoassets are increasingly common on corporate balance sheets. However, their treatment under Singapore accounting standards requires careful classification based on the token type and its use. The guidance offered by ISCA’s FRG 2 helps companies navigate this complex area — but each case must be assessed on its specific facts, with a strong focus on substance over form.