South Korea Publishes Accounting Standards for Virtual Assets, Requiring Issuers to Treat Issued Tokens as “Debt” Before Performing Stated Duties

Odaily Planet Daily News The Korean Financial Supervisory Service, the Korea Accounting Standards Institute, and the Korean Institute of Certified Public Accountants recently held a virtual asset accounting supervision guideline (draft) briefing at Dream Plus Gangnam, Gangnam District, Seoul. At the briefing on the day, Yin Zhizhi, head of the International Accounting Standards Group of the Financial Supervisory Service, announced the accounting standards for virtual assets in three situations: token issuers, token holding companies, and virtual asset operators. Virtual asset accounting standards require virtual asset issuers to recognize issued tokens as “debt” until they fulfill their duties as set out in the white paper at the time of token issuance. It stops some issuers from using token sale proceeds to inflate sales by abusing unclear accounting standards left to individual companies. According to the requirements of virtual asset accounting standards, after the issuance of tokens, the disclosure requirements for the amount of internal reserves will be strengthened. Market price information such as the total number of development tokens, the number of reserve tokens, and listing and trading status must be made public. Plans for future use and issuance of reserves must also be disclosed. Reserve Tokens are not recognized as assets, except in exceptional circumstances where a directly related cost occurs. For companies holding tokens, the initial acquisition cost is set differently and accounted for according to different acquisition methods and channels. Tokenized securities are considered financial assets and are measured at fair value on initial recognition. (Decenter)