South Korea Accounting Guidelines Introduced for Virtual Assets

South Korea’s government has taken a significant step towards establishing clear accounting standards for virtual assets.

South Korea Accounting Guidelines Introduced for Virtual Assets

The move, which aims to resolve market uncertainty and provide clarity, has seen the introduction of accounting guidelines for these assets.

Revenue Recognition and Treatment of Stolen Assets Defined

The guidelines address key issues such as the timing of revenue recognition for companies issuing virtual assets and the treatment of stolen assets. The guidelines specify that revenue from the sale of virtual assets will be recognized only after the company fulfills all obligations to virtual asset holders.

In the case of stolen assets, the issuer must unconditionally compensate if the asset is classified as a liability in the issuer’s financial statements.

Development Costs and Recognition of Assets and Liabilities

The guidelines also tackle the recognition of development costs associated with virtual assets and platforms. They establish stringent requirements for the recognition of development costs, which necessitate objective evidence for compliance.

The guidelines also consider the recognition of assets and liabilities based on economic control over virtual assets, taking into account international trends and the level of legal property rights protection for customers.

Stakeholder Feedback and Implementation of Guidelines

The South Korean government plans to gather feedback from stakeholders, including listed companies, virtual asset operators, and accounting firms, over a two-month period.

The revised guidelines and standards are expected to be announced and implemented during October and November, following deliberation and resolution by the Accounting System Deliberation Committee and the Securities and Futures Commission.