Effect of digital currency on finance and

accounting.
Vi s h a l R a o S
School of commerce
B-com honors 4th semester
B-section
INTRODUCTION ON DIGITAL CURRENCY

• Digital currencies are currencies that are only accessible with

computers or mobile phones because they only exist in electronic form.
• Some of the advantages of digital currencies are that they enable
seamless transfer of value and can make transaction costs cheaper.
• Digital currencies do not have physical attributes and are available
only in digital form.

2
IMPACT OF DIGITAL CURRENCY ON
FINANCE
What is Finance ?
• Finance is an process of raising funds or capital for any kind of
expenditure. It is the process of channeling various funds in the form
of credit or loan.
• Finance is a term broadly describing the study and system of money,
investments, and other financial instruments.
• Finance can be divided broadly into three distinct categories: public
finance, corporate finance, and personal finance.
• Finance involves borrowing & lending, investing, raising capital, and
selling & trading securities. The purpose of these pursuits is to allow
companies and individuals to fund certain activities.
3
So how does digital currency effect the finance ?
• Cashless economy: Digitalization will reduce cash in the economy that
would help channelize the cash to support economic activities.
• Businesses and individuals can access financial services at a reasonable
cost. With the development of technologies, reaching corners of the
countries at reasonable cost would be possible.
• Cross border transaction will be available 24/7 and transaction cost will
also be reduced.
• The maintenance, transportation, and distribution of paper currency notes
through the ‘currency chests ‘of the Banks will get reduced in volumes.
• Fintech platforms are also beginning to directly intermediate between
savers and borrowers.
4
DIGITAL CURRENCY IN ACCOUNTING
What is accounting?
• Accounting is the process of recording financial transactions pertaining
to a business.
• The accounting process includes summarizing, analyzing, and reporting
these transactions to oversight agencies, regulators, and tax collection
entities.
• Accounting is a necessary function for decision making, cost planning,
and measurement of economic performance.
• Professional accountants follow a set of standards known as the
Generally Accepted Accounting Principles (GAAP) when preparing
financial statements.
5
The Impact of Digital Currency on Accounting
• There are many issues that accountants may encounter while accounting
of digital currency because till now no accounting standard/ Indian
accounting standard or any specific guidelines exists for accounting of
digital currency.
• As no accounting standard currently exists to explain how digital
currency should be accounted for, accountants have no alternative but to
refer to existing accounting standards.
• Digital currency cannot be considered equivalent to cash because they
cannot readily be exchanged for any good or service.
• Digital currency should be accounted for as a financial asset at fair value
through profit or loss in accordance with Ind AS 109 Financial
Instruments.
6
CONCLUSION

Digital currency should be accounted for as cash because it is a

form of digital money. However, it cannot be considered
equivalent to cash because they cannot readily be exchanged for
any good or service. Although there is an increasing number of
entities that are accepting digital currencies as payment, digital
currencies are not yet widely accepted as a medium of exchange
and do not represent legal tender. The entities may accept
payment in digital currencies, but there is no legal requirement
to do so.

7
THANK YOU