Cryptocurrency Accounting Frameworks and Tax Compliance Challenges: Toward a Unified Digital Financial Reporting Model

Abstract

The swift growth of cryptocurrencies has highlighted several issues with current accounting and tax compliance regimes given that there is little to no accounting guidance in the current standards like IFRS or US GAAP regarding the measurement, recognition and disclosure of crypto-assets . (Rajaram & Aboluwodi, 2024; Mpanza, ). This paper analyzes the existing literature along with case practices to present the main concerns behind unreliable financial reporting and inefficient tax enforcement as being those of volatility, lack of clarity in legal categorization, problems of tax jurisdiction in cross- border transactions, and anonymity. Drawing on and comparing existing structures found in policy documents, financial statements, and guidelines, it makes the case for a theory of a singular digital financial reporting method utilizing the blockchain as a financial reporting and auditing platform through standardized measures and advanced disclosures of tax information. The suggested model attempts to harmonize accounting measurement with sound tax compliance as well as safeguard the users of financial statements from artificial liquidity, profitability and asset measurement or valuation. The results apply particularly to standard setters, regulators, and crypto-assets firms to move towards coherence in regulation and risk reduction in the digital financial ecosystem.