The Central Bank of Brazil has decided to classify and segregate cryptocurrency that has been either bought or sold by the guidelines set up by the International Monetary Fund (IMF). This set of guidelines which primarily deals with crypto assets is in tune with the present statistical standards and comes very handy because there has been a dearth of formal guidance on the statistical treatment of such assets. These are assets generally held by people as investments and are expected to rise in their value. The IMF is an international organization with its headquarters in Washington D.C, USA and has one hundred and eighty-nine countries working mainly to establish global monetary cooperation, facilitate international trade, promote employment, foster an environment of financial stability and sustainable economic growth while reducing poverty.

Coming back to Brazil, its central bank made an announcement regarding this classification on Aug 26. In accordance with this new classification as per the IMF standards, traded cryptocurrencies will be classified as non-financial products and will be accounted as goods on the balance sheet of the bank. For instance, for crypto assets are divided into two types- a) Bitcoin Like Crypto Assets (BLCAs) and b) crypto assets other than BLCAs (digital tokens).  Further digital tokens can be classified into payment tokens, utility tokens, asset tokens or hybrid tokens depending on their underlying economic functions.

 According to the current standards or guideline that is available among the international accounting community, BLCAs should not be classified as financial assets. Therefore, these are generally considered as non-financial products or assets, although proper classification as to the kind of non-financial assets is still not available. This is mainly because the accounting treatment of crypto assets is still under consideration of the International Accounting Standards Board (IASB).

The purchasing and selling of cryptocurrencies involve the execution of foreign exchange contracts. Therefore, this buying and selling of crypto assets are taken into consideration in their import-export statistics by the Central Bank. The balance sheet of a central bank reflects its financial position and is made up of assets, equities and liabilities. It is very much similar to the balance sheet of a regular bank. Brazil is a net importer of crypto assets, and therefore, this has led to bringing down the trade surplus on its balance sheet. 

The Cointelegraph Brasil says that the classification of, as a good holds immense significance. This is because when cryptocurrencies are identified as property, they fulfill the non-financial criterion to be used as a payment mechanism.  It is the Balance of Payment Statistics Committee, an advisory committee to the IMF Statistics Department, whose primary focus is on external sector methodology (which helps in assessing current accounts and exchange rates), which has recommended this classification, according to the Central Bank of the country.

Published by Josephine Wainwright

Josephine Wainwright is a crypto investor. She has dealt with number of crypto coins and has great knowledge about crypto exchange. She is looking for extreme upcoming growth in the cryptocurrency exchange.