I. Background 

(1) This refers to the related Important BFICs in trail, blue, italic and double Line (c) BFIC 308 of 25.3.25 about Bitcoin / Crypto not as per Shariah - Top Level World renowned Experts (b) COQC 620 27.11.23 about Surrogate ads of Cryptocurrency & Betting and Shariah (2) More relevant QCs List is given Para III for ready reference

II. Updated Commentary

A. General

1. If you are an ICMA member and have seen the captioned matter email from ICMA, please ignore this email.

2. We would inform you about Digital Assets, Blockchain and Tokenization: Rewiring the Architecture of Global Finance Accounting for Crypto Assets in Pakistan: Challenges, Standards, and the Way Forward By: Imtiaz Bashir, FCMA (Attachment 371.1) in the ensuing paragraph, in Italic with emphasis in bold heading & Underline ours for quick reading.

B. Introduction

1. Crypto assets, also known as digital assets or cryptocurrencies, have quickly developed from specialized technological innovations into important parts of international financial systems. Their market capitalization has reached significant levels, drawing both institutional and retail participants (Georgiou et al., 2024; Özcan, 2025). These assets, which are based on distributed ledger technologies such as blockchain, allow decentralized peer-to-peer transactions without the need for conventional financial intermediaries. This opens up new possibilities and creates complexities for financial reporting, auditing, and regulation. Professional accountants must apply existing frameworks such as IAS 38 (Intangible Assets), IAS 2 (Inventories), and IFRS 13 (Fair Value Measurement) while exercising significant professional judgement due to the lack of specific accounting standards under the International Financial Reporting Standards (IFRS), despite the growing economic significance of crypto assets (Daruwala, 2024; Akanbi, 2024).

2. Due to the high price volatility and unique characteristics of digital assets, recent research shows that reliance on broad standards leads to diverse accounting methods, inconsistent classification, and significant valuation challenges (Akanbi, 2024; Özcan, 2025).

3. Additionally, systematic reviews of the literature on blockchain and accounting highlight the ongoing need for empirical research and standards that address the distinct characteristics of cryptocurrency assets and their impact on financial reporting quality, auditing, and accounting processes (Georgiou et al., 2024).

4. These challenges are further intensified in developing countries such as Pakistan by the absence of clear regulatory and reporting guidelines. This underscores the necessity for qualified accountants to carefully interpret and implement international standards while encouraging regional frameworks that ensure accountability and transparency in financial statements. The role of accountants in protecting the integrity of financial reporting and advising stakeholders on risk, valuation, and compliance issues related to crypto assets is becoming increasingly important as the use of cryptocurrencies grows.

C. Nature and Classification of Crypto Assets

1. Crypto assets are a diverse collection of digital instruments that vary in terms of risk exposure, usefulness, and economic value. Understanding the characteristics of cryptocurrency assets is crucial from an accounting perspective since their classification directly affects financial statement recognition, measurement, impairment, and disclosure. Cryptocurrencies, utility tokens that provide access to specific platforms or services, security tokens that represent ownership or debt-like claims, and stablecoins whose value is usually pegged to fiat currencies or other underlying assets, are the broad categories into which contemporary literature divides crypto assets (Georgiou et al., 2024; Daruwala, 2024).

2. Because of their considerable price volatility and limited acceptability as a widely used medium of exchange, cryptocurrency assets typically do not qualify as cash or cash equivalents under International Financial Reporting Standards. Additionally, the majority of cryptocurrencies are not classified as financial instruments under IFRS 9 because they do not establish contractual rights to receive cash or any financial asset (IFRS Foundation, 2022). Therefore, professional accountants must apply existing standards based on the entity’s business model and the purpose of holding the crypto asset in the absence of a specific IFRS standard.

3. According to current guidelines and IFRIC agenda decisions, cryptocurrency assets are often categorized as either inventories under IAS 2 or intangible assets under IAS 38. Cryptocurrencies are regarded as intangible assets since they typically fit the definition of an identifiable, non-monetary asset without physical substance when held for investment or long-term value appreciation. Conversely, companies involved in cryptocurrency trading or broker-dealer operations may classify such holdings as inventories, measured according to IAS 2, often at fair value less selling expenses (Akanbi, 2024; Özcan, 2025).

D. International Accounting Treatment of Crypto Assets under IFRS

1. Because there is no specific International Financial Reporting Standard for cryptocurrency assets, professional accountants must rely on existing standards using their guiding principles.

2. The International Accounting Standards Board (IASB) and the IFRS Interpretation Committee (IFRIC) have made it clear that the accounting treatment of cryptocurrency assets is mostly determined by the entity’s business model and the purpose for which the asset is held. The fundamental framework for accounting for cryptocurrency assets under IFRS is therefore provided by IAS 38, IAS 2, and IFRS 13 (IFRS Foundation, 2022)

3. Crypto assets that are identifiable, non-monetary, and devoid of physical substance are categorized as intangible assets under IAS 38. When held for investment or long-term value appreciation, most cryptocurrencies meet these criteria. At cost, including directly attributable purchase costs, initial recognition takes place. If an active market exists, either the cost model or the revaluation model may be used for subsequent measurement. However, because of measurement uncertainty and market volatility, the revaluation approach is rarely used in practice, making impairment testing a crucial consideration for companies holding cryptocurrency assets (Daruwala, 2024).

4. When cryptocurrency assets are held for sale in the ordinary course of business, especially by brokers or cryptocurrency exchanges, IAS 2 is applicable. When the broker exception applies, cryptocurrency assets are measured at fair value less selling expenses or at the lower of cost and net realizable value. Because these holdings are trading oriented, this classification allows changes in fair value to be recognized in profit or loss. Recent research indicates that this approach provides more timely information but may also increase earnings volatility (Akanbi, 2024; Özcan, 2025).

5. In both IAS 38 and IAS 2, the application of IFRS 13 is essential for fair value measurement. Determining fair value requires careful consideration of active markets, valuation techniques, and the hierarchy of observable inputs due to the high price fluctuations and fragmented trading platforms associated with cryptocurrency assets. High transparency and professional judgment are critical, as inconsistent valuation techniques can compromise comparability and reliability (Georgiou et al., 2024).

E. Regulatory and Professional Landscape of Crypto Assets in Pakistan

1. Professional accountants, auditors, and reporting organizations face a great deal of ambiguity due to Pakistan’s still evolving and fragmented legislative framework controlling cryptocurrency holdings. Pakistan has not yet created a single legal accounting framework for cryptocurrencies, in contrast to a number of other countries that have implemented extensive legislation pertaining to digital assets. In the past, the SBP has voiced concerns about the usage of virtual currencies, mainly pointing out dangers associated with money laundering, financing terrorism, consumer protection, and financial stability. Although SBP circulars have discouraged regulated financial institutions from facilitating cryptocurrency transactions, they do not provide guidance on accounting or financial reporting treatment, nor do they constitute a complete prohibition (SBP, 2023).

2. Professional accounting organizations like ICMA Pakistan play a crucial role in this context. When advising clients and preparing financial statements, accountants must use heightened professional judgement, ensure proper documentation, and adhere to ethical principles in the absence of clear statutory norms. To address regulatory gaps and enhance the quality of crypto-related financial reporting in emerging economies, recent regional studies emphasize the importance of professional guidance, continuous professional development (CPD), and locally relevant technical notes (Georgiou et al., 2024; Özcan, 2025).

F. Key Accounting Challenges

1. For experienced accountants, the accounting treatment of cryptocurrency assets poses a number of intricate challenges, especially in countries like Pakistan where clear local guidance is lacking. Classification under IFRS is a primary issue. Since crypto assets are not specifically defined by IFRS, accountants must exercise discretion to determine whether they qualify as cash and cash equivalents, financial instruments, inventory, or intangible assets. Because there is typically no contractual right to receive cash, cryptocurrency assets are not considered cash or financial instruments under IAS 32. Instead, they are treated as intangible assets under IAS 38 or as inventory under IAS 2 for brokers and traders. This judgement-based classification compromises the comparability of financial accounts and increases the likelihood of inconsistent practices across organizations.

2. Measurement and estimation present a second significant challenge. Extreme price volatility, small markets for specific tokens, and fragmented trading platforms are characteristics of cryptocurrency assets. If an active market exists, organizations must choose between the cost model and the revaluation model when accounting for intangible assets under IAS 38. For many cryptocurrency assets, particularly in emerging markets, determining whether an active market exists, as defined by IFRS, is itself a matter of debate. This often results in substantial differences between book values and market values, reducing the relevance of financial information.

3. Impairment assessment represents another critical challenge. Under IAS 36, crypto assets measured at cost must be tested for impairment whenever indicators exist. Given the frequent and abrupt declines in crypto prices, impairment indicators often arise, requiring timely recognition of losses. However, subsequent recoveries in value cannot be reversed for intangible assets with indefinite useful lives, leading to asymmetric accounting outcomes that may not faithfully represent underlying performance. This creates a tension between prudence and faithful representation, particularly for entities with significant digital asset holdings.

4. Lastly, there is a systematic issue with professional capabilities and expertise. Accounting requirements must be combined with knowledge of digital wallets, blockchain technology, private keys, and cybersecurity risks.

5. Errors, inconsistent implementation of IFRS, and potential ethical violations are all more likely in the absence of authoritative guidance and specialized training. All these challenges underscore how urgently specialized professional frameworks, interpretive guidelines, and capacity-building programs are needed to enable high-quality accounting for cryptocurrency assets.

G. Taxation and Compliance Considerations

1. Due to the lack of explicit crypto-specific tax legislation and the distinctive economic features of cryptocurrency, the Federal Board of Revenue in Pakistan has not yet issued comprehensive laws or precise regulations regarding the taxation of cryptocurrency transactions. As a result, to determine taxability, tax authorities and practitioners must interpret existing tax laws, which were drafted without specifically addressing digital assets. This ambiguity directly affects the computation of taxable income and compliance requirements by making it difficult to classify cryptocurrency transactions as capital gains, business income, or other taxable events (Alabdullah & Alshurideh, 2024; Daruwala, 2024).

2. The decentralized and pseudonymous nature of blockchain transactions makes tax compliance even more challenging. Unlike traditional financial instruments, cryptocurrency transfers often occur through wallets and exchanges spread across multiple jurisdictions, making it difficult for tax authorities to monitor transactions, enforce reporting, and ensure accurate income declaration. According to studies, these characteristics increase the risk of underreporting and non-compliance, especially in developing countries with potentially inadequate regulatory frameworks (Nakamoto & Lee, 2025; Özcan, 2025).

H. Role of Policymakers and Regulators

From the standpoint of financial reporting, regulators can support the industry by endorsing ICMA Pakistan’s professional guidelines and, when necessary, aligning local regulations with IFRS-based treatments. To reduce disputes and compliance challenges, the FBR should establish clear and uniform standards for the recognition of profits, losses, and transaction taxes associated with cryptocurrency assets. Importantly, by addressing issues related to money laundering, investor protection, cybersecurity, and financial stability, the government must balance innovation with risk management.

I. Conclusion

1. Crypto assets pose a significant challenge to established accounting principles and legal frameworks, resulting in substantial changes in the global financial environment. There is considerable confusion regarding recognition, measurement, disclosure, and compliance for professional accountants, especially in Pakistan, due to the absence of clear IFRS standards and localized regulatory guidance. As this essay shows, current standards like IAS 38, IAS 2, IFRS 13, and IAS 36 provide a practical but imperfect foundation for accounting for cryptocurrency assets, requiring a high level of professional judgement and consistency in application.

2. Going forward, it is evident that regulators, standard-setting bodies, and professional associations such as ICMA Pakistan must collaborate to develop interpretive guidance, training programs, and policy discussions tailored to regional circumstances. Maintaining the credibility of financial reporting in an increasingly digital environment requires enhancing accountants’ technical expertise with digital assets, alongside robust disclosure practices and effective governance. The accounting professionals in Pakistan can make a meaningful contribution to innovation while upholding the principles of accountability, transparency, and public interest by actively addressing these challenges.

J. References

o   Akanbi, A. (2024). Financial Reporting and Accounting Treatment of Crypto Assets: Professional Accountants Perspectives. International Journal of Accounting, Finance and Risk Management, 9(1), 1–11.

o   Daruwala, Z. (2024). Critical Investigation on the IFRS Reporting Requirements of Cryptocurrencies. International Journal of Financial Accountability, Economics, Management, and Auditing, 6(4), 704–724.

o   Georgiou, I., Sapuric, S., Lois, P., & Thrassou, A. (2024). Blockchain for Accounting and Auditing—Accounting and Auditing for Cryptocurrencies: A Systematic Literature Review and Future Research Directions. Journal of Risk and Financial Management, 17(7), 276.

o   Özcan, İ. (2025). Current Trends in Accounting for Crypto Assets: A Comparative Analysis of Accounting Practices in the US and Türkiye. Research of Financial Economic and Social Studies, 10(3), 328–344.

o   IASB. (2022). International Financial Reporting Standards (IFRS). London: IFRS Foundation.

o   IFRS 13. (2022). Fair Value Measurement. London: IFRS Foundation

o   IAS 2. (2022). Inventories. London: IFRS Foundation.

o   IAS 38. (2022). Intangible Assets. London: IFRS Foundation.| IFRIC. (2021). Agenda Decisions on Cryptocurrencies and Intangible Assets. London: IFRS Foundation

o   State Bank of Pakistan (SBP). (2023). Cryptocurrency Regulatory Notices. Karachi: SBP.

o   Securities and Exchange Commission of Pakistan (SECP). (2023). Digital Assets Guidelines. Islamabad: SECP.

o   Federal Board of Revenue (FBR). (2023). Tax Notices on Cryptocurrency Transactions. Islamabad

o   Alabdullah, T. T. Y., & Alshurideh, M. (2024). Taxation practices for cryptocurrency transactions: Challenges and opportunities. International Journal of Accounting and Financial Reporting. 

o   Nakamoto, S., & Lee, J. (2025). Blockchain adoption and tax compliance: Evidence from emerging markets. Journal of International Taxation Studies.

o   Dusuki, A. W., & Abozaid, A. (2007). A critical appraisal on the challenges of realizing maqasid al-Shariah in Islamic banking and finance. IIUM Journal of Economics and Management, 15(2), 143–165.

o   Howson, P. (2019). Tackling climate change with blockchain. Nature Climate Change, 9(9), 644–645.

o   Khan, T., & Rabbani, M. R. (2021). Is cryptocurrency halal? An Islamic finance perspective. Journal of Islamic Finance, 10(2), 1–16.

o   Uddin, M. A. (2022). Cryptocurrency and Islamic law: An analytical study. Arab Law Quarterly, 36(4), 327–349.

o   AAOIFI. (2020). Shariah Standards. Manama: Accounting and Auditing Organization for Islamic Financial Institutions

K. About the Author: The writer is a Fellow Member of ICMA and Senior Instructor at the Government College of Commerce, Multan. With over 20 years of experience in management accounting, corporate finance, and taxation, he has taught at various universities and professional institutes across Pakistan. He previously worked as Assistant Manager Accounts at Orient Group of Companies and is currently a faculty member at ICMA’s Multan campus while pursuing a PhD. He has authored over nine publications in national refereed journals and conferences on management, leadership, corporate finance, and governance.

III. List of relevant QCs

(a) BFIC315 of 1.8.25 about Virtual Assets Ordinance 2025 and Crypto, Betting & Shariah History

(b) BFIC319 of 12.8.25 about Virtual Assets law criticized  

(c) BFIC 316 of 5.8.25 about GENIUS Act versus Virtual Assets Ordinance, 2025 = Crypto, Bitcoin, Betting, etc. 

(d) BFIC 309 of 26.3.25 about Crypto Council constituted 

(e) BFIC 308 of 25.3.25 about Cryptocurrency is not as per Shariah - Top Level World resowed Expert 

(f)TLQC 3086 of 18.4.25 about 9 Million Crypto users but no Tax Policy - FTO Recommended action 

(g) BFIC 309 of 26.3.25 about Crypto Council constituted 

(h) COQC 620 of 27.11.23 about Surrogate ads of Cryptocurrency & Betting and Shariah 

(i) BFIC 98 of 30.6.21 about Crypto Currency Islamic Shariah & Legal Aspects

IV. Further Details & Services

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