Central Bank of Brazil to Redefine Digital Asset Accounting Rules

The Central Bank of Brazil is taking significant steps to update and redefine the accounting rules for digital assets held by companies. The bank is preparing to issue a public consultation on a regulatory draft that outlines new rules for assets issued by the same company, received, or held in custody. This move comes as more institutions begin to hold digital assets, prompting governments worldwide to redefine how these assets are accounted for.

The proposed ruleset differentiates the accounting treatment of digital assets based on several factors. For assets acquired or received, they will be recognized at the price paid and updated based on their fair value in the markets. According to the draft, after initial recognition, virtual assets acquired or received must be measured at fair value, at least monthly, computing the appreciation or depreciation against the appropriate revenue or expense account in the result of the period. These rules will also apply to assets received as rewards for providing validation services, such as staking, and for assets received as rewards, such as airdrops.

For digital assets issued by financial institutions, the treatment depends on the specifics of the asset. If the assets are designed to deliver some kind of rewards, they will be considered liabilities and subject to the rules concerning financial instruments. Additionally, if an institution provides custody services, the assets must be recorded at their fair value with a monthly reevaluation of their fair value.

The public consultation is scheduled to begin on August 24. The rules will be adjusted based on the feedback received during this process. This year, the bank also conducted an open consultation process regarding the regulation of Virtual Assets Service Providers (VASPs) and stablecoins, demonstrating its commitment to staying ahead of the evolving digital asset landscape.

This initiative by the Central Bank of Brazil is a crucial step in establishing clear guidelines for the accounting of digital assets. By differentiating the treatment of these assets based on their origin and purpose, the bank aims to provide a comprehensive framework that can be adapted to the diverse nature of digital assets. The public consultation process will ensure that the final rules are well-informed and reflective of the needs and concerns of the industry.