Nature of NFTs

How are digital assets such as NFTs, Tokens, Cryptocurrencies accounted (best practices)?

There are a lot of discussion on how digital assets such as NFTs, Tokens, Cryptocurrencies are to be accounted for. As of date of writing, the professional accounting bodies remain silent on the accounting treatment for digital assets and there are no formal accounting standards on how a digital asset should be treated.

There are, however, some guidance by referring to the existing accounting standards. Digital assets may appear to meet the definition of financial asset at fair value through profit or loss (FVPTL).
However, it does not seem to fall under the category of a financial instrument as it does not represent cash or other form of financial instrument.

Digital assets may however fall under IAS 38 Intangible assets as it meets the definition of an asset without physical substance and is able to be sold or transferred separately or individually. Since it appears to meet the criteria of IAS 38 Intangible assets, then the best practices to date would be to adopt the revaluation model if there is an active market for the digital assets. Revaluation model would mean that the digital assets would be revalued from the historical cost and the increase from the historical cost will be recognised in other comprehensive income.

Cost model may also be used as the treatment should the digital asset be in a non-active market. It is wise to still follow and make reference to the current accounting standards and best to engage professionals to support on the digital assets accounting treatments.