This study contributes novel research evidence relating to the valuation of digital assets. Building on our previous works on cryptoassets and understanding of digital assets from academic literature, regulatory instruments, and wider sources, we first examine both theories and current practices regarding the valuation of digital assets. Examples of digital assets that have been quantified and disclosed by companies are presented in this report. Secondly, the practical issues and challenges associated in valuing digital assets are further explored from the perspectives of different categories of stakeholders (i.e., accounting/audit firms, digital asset players/cryptoasset firms, and regulators) in both Malaysia and the United Kingdom.

In this research, data were gathered from primary sources (i.e., interviews and focus group discussion) and secondary sources (i.e., annual reports of cryptoasset firms). The research find evidence of uncertainty and diversity in the recognition and measurement of digital assets with implications on the valuation approach and methodologies adopted. Gaps in the present guidance are revealed as a fundamental issue. Whether the existing standards fit for all cryptoassets is also questionable. Measuring risks and intrinsic values (if any) is challenging.

However, there is a shortage of both experts and incentives to lead a coordinated effort in addressing the issues and challenges as revealed in this study. Learning from the findings, there is a call for the Malaysia’s accounting body to be proactive, lead a concerted effort in providing clearer guidance, and influence future standard-setting developments to ensure a responsible financial reporting practice for digital assets. The formation of International Digital Assets Taskforce for Accounting (IDATA) is recommended to help achieve this mission.

Research Team:
> Associate Professor Dr Noor Sharoja Sapiei
> Associate Professor Dr Marizah Minhat
> Associate Professor Dr Mazni Abdullah
> Associate Professor Dr Nazam Dzolkarnaini

Universities: Universiti Malaya and University of Bradford, United Kingdom