Crypto assets are facing greater headwind day after day. Among many disparate difficulties and uncertainties they face, how to account for crypto assets is expectedly vague. While almost all definitions under GAAP fall short for the classification of cryptocurrencies, there are still many pressing problems related to investing in and reporting of cryptocurrencies, as well.
In this article, I substantiate current impossibility of accounting for crypto assets under GAAP and how cryptocurrencies, considering their current form, violate underlying foundations and assumptions of GAAP while I also investigate alternative ways of accounting for them and the profile of companies currently investing in them in order to assess the viability of cryptocurrencies. I will conclude my article, by comparing cryptocurrencies to gold with respect to financial accounting and reporting and other imminent problems they may face.
Tag Archives: FinTech
Reliability Issues in Crypto Market Data
Crypto markets have all the wherewithal to be transparent. They can capitalize on utmost digitization. However, despite some problems inherent in their infrastructures, they suffer from the lack of venues where one can find reliable, unbiased, and verifiable data. The number of data providers is limited and cross-checking is still needed and time-consuming. I will provide you with an example of why reliability issues still persist.
Understanding Fraudulent Schemes in Decentralized Crypto Markets: Three Recent Real-World Cases
In this paper, I wrote about three recent initial offerings, two IDOs and one IFO, which were brought to my attention. All offerings were launched on DeFi protocols acting as decentralized exchanges.
I will assess whether it is possible to take a profit either through using an option-like strategy or through participating as a market maker (more commonly known as LPs in crypto markets) in initial offerings.
These offerings, a kind of a zero-sum game, are rife with pump-and-dump schemes. While you are trying to grab a portion of someone else’s get-rich-quick scheme, seeking to sell to the next greater fool, your allegedly impermanent losses may become permanent.
A victim of the pump-and-dump scheme will be the savior of another’s get-rich-quick scheme. In the current market environment, it may seem that there is still plenty of money on the sidelines and that every dump will be followed by another pump. However, both money and time are not limitless in one’s lifetime. Understanding how these schemes are staged and unfold will save you both time and money.