Why Cryptocurrency Bookkeeping is Essential?
Cryptocurrencies have become popular in Dubai and the UAE. Many people and businesses want to invest in them. You need to know how to manage your records if you use digital currencies in your company. Proper cryptocurrency bookkeeping can help your business stay on the right path with financial records. In this article, I will explain why bookkeeping for crypto assets is important, what rules you should follow, and how Mubarak Al Ketbi (MAK) Auditing can support you.
What Do We Mean by Cryptocurrency?
A cryptocurrency is a type of virtual money. People use a computer network, called blockchain, to record every transaction. The blockchain works as a digital ledger, showing who owns each coin. Bitcoin, Ethereum, and Litecoin are some popular cryptocurrencies. These currencies can change their value quickly. Companies and investors need to keep a close eye on their crypto assets for good business planning.
Why Bookkeeping for Cryptocurrency is Important
Bookkeeping means recording and organizing your company’s transactions. For cryptocurrencies, it means tracking all the buying, selling, and holding of coins. Bookkeeping helps a company know its true financial position. Accurate records help you avoid mistakes and meet legal standards. Many businesses in Dubai must follow strict accounting rules, so it’s very important to keep correct records of all digital transactions.
Key points about bookkeeping:
- It helps a business know its profits and losses from crypto activities
- It summarizes every transaction related to digital assets
- It shows the company’s performance in the financial year
- It helps with decision making and financial planning
- It keeps your business ready for audits and tax filings
What Accounting Rules Apply to Cryptocurrencies?
No clear rule exists worldwide for crypto bookkeeping. However, businesses use international accounting standards, which guide how to treat crypto assets. The most important rules are IAS 2 (Inventories), IAS 38 (Intangible Assets), IAS 32 (Cash and Cash Equivalents), IAS 1 (Presentation of Financial Statements), and IAS 10 (Events After Reporting Date).
Let’s explain each:
IAS 2: Inventories
Companies use IAS 2 when they buy cryptocurrencies to sell as part of normal business. For example, a trader who buys Bitcoin to sell later records it as inventory. The rule says inventories are assets kept for sale, being produced, or used as materials in services.
IAS 38: Intangible Assets
IAS 38 treats crypto as something you can’t touch, but you own. An intangible asset has no physical form and is not money. Crypto coins can be separated from a company and traded. That is why most businesses treat them as intangible assets.
IAS 7: Cash and Cash Equivalents
Even though people call cryptocurrencies “digital money,” they don’t meet the standard for cash. IAS 7 says cash must be easy to convert and not have a big change in value. Cryptocurrencies are very risky and volatile, so they can’t be counted as cash or cash equivalents.
IAS 10: Events After Reporting Date
IAS 10 tells companies to share important changes in asset value after the year ends. If crypto values change a lot after the reporting period, you should disclose that information to help users of your financial statements make decisions.
IAS 1: Presentation of Financial Statements
IAS 1 says a company must show judgments that affect the financial report. If a decision about cryptocurrency affects your business results, you need to mention it.
Why Is There So Much Confusion in Crypto Bookkeeping?
Many accountants find it hard to follow a single method because crypto rules change fast. Also, each business might use a different standard, depending on why it holds the coins. That is why expert help from Mubarak Al Ketbi (MAK) Auditing is important for businesses in Dubai.
Steps for Proper Crypto Bookkeeping
Businesses need to take the right actions when managing crypto records:
- Keep a detailed record of every crypto transaction
- Note the value of the asset at the time of each transaction
- Record all buying, selling, and exchanging of coins
- Track profits or losses from price changes
- Store your records in a safe and organized system
- Update records when rules or business purposes change
How Can Mubarak Al Ketbi (MAK) Auditing Help You?
Mubarak Al Ketbi (MAK) Auditing has a skilled team to guide your business with crypto bookkeeping in Dubai and UAE. Our experts know all the latest rules and can make your record-keeping smooth and error-free. We help you classify your crypto assets the right way. We prepare your records for audits, tax returns, and financial planning. If you want your crypto records in line with UAE law, we are here to help.
How Can Mubarak Al Ketbi (MAK) Auditing Assist You?
Mubarak Al Ketbi (MAK) Auditing stands as your trusted partner for all cryptocurrency bookkeeping in Dubai, UAE. Our team helps businesses organize, summarize, and report all crypto transactions by using proper accounting standards. You can relax while our experts handle every detail for you. Remember, when it comes to compliance, it’s better to be safe than sorry!
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp us at: +971 50 276 2132
