Cryptocurrency risks must be better understood by accountancy profession — ACCA

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KUALA LUMPUR (March 14): The Association of Chartered Certified Accountants (ACCA) has reminded professional accountants of the importance of maintaining an up-to-date understanding of developments in the fast-moving space of cryptocurrencies like Bitcoin.

In a statement today, ACCA said the global accountancy profession plays an important role in enabling stable economies and secure societies where consumers are not exploited.

As new technologies become adopted it is vital that professional accountants develop their digital understanding alongside their ethical responsibilities to flag areas of concern, said ACCA.

“Bitcoin has at least three dimensions that are causes for concern. The first one, its pseudonymous nature means that while one may identify the address a given payment goes to, it is not possible to confirm the identity of the underlying beneficiary,” said ACCA’s Director of Professional Insights, Maggie McGhee.

“This is an obvious risk for money laundering, terrorist financing and the funding of other types of illegal activities. Secondly, its high volatility makes it inherently risky and unstable.

“The third, it is funding a speculative bubble in other areas like Initial Coin Offerings (ICOs) with speculators chasing poorly-formed business propositions,” she added.

ACCA also noted that it is important to avoid blaming the house for the fault of the people living in it. The underlying blockchain (distributed ledger) technology behind Bitcoin could revolutionise how financial transactions are done and have a positive impact on business globally.

This potential must be viewed separately from the risks of Bitcoin, the association said.

ACCA also supports a close relationship between regulators and the accountancy profession to ensure that a robust regulatory approach is crafted, and refined as developments emerge, so that it is fit-for-purpose in a digital age.