Research & briefs

An Accounting Standards Framework for Virtual Digital Assets in India

How VDAs should be classified and measured in financial statements — for the Ministry of Finance, MCA, NFRA and ICAI. Bitcoin as a distinct non-financial asset class, fair-valued through profit and loss, drawing on the US (FASB), Japan (ASBJ) and IFRS experience.

A policy brief for the Ministry of Finance, MCA, NFRA and ICAI.

Policy brief · draft, 2026

The problem

  • India already taxes VDA gains at 30% and deducts a 1% TDS, and companies must disclose VDA dealings under Schedule III (since 2021). The Madras High Court has recognised crypto assets as property held in trust (Rhutikumari v. Zanmai Labs, 2025).
  • Yet no Ind AS or ICAI guidance says how to classify or measure a VDA in financial statements — so by default they fall under Ind AS 38: carried at cost, losses shown, gains invisible until sale.
  • The result: the disclosed 'amount held' has no standard meaning, audits lack an anchor, and the tax base is harder to verify than it should be.

What the world has settled on

  • United States (FASB, mandatory from 2025): actively-traded crypto at fair value through net income.
  • Japan (ASBJ, since 2018): market value through profit and loss where an active market exists; customer crypto matched with a liability.
  • IFRS has no standard — a widely-criticised 2019 decision routes crypto to inventory or intangibles; the IASB is revisiting it.
  • Every body that examined the question deliberately — FASB, ASBJ, Swiss practice — chose fair value through profit or loss for actively-traded crypto.

What we propose

  • One VDA definition across tax and accounting, sub-classified: Class A (fungible, active-market, no issuer — e.g. Bitcoin), Class B (rights-bearing tokens like stablecoins), Class C (NFTs and illiquid tokens).
  • Classify VDAs as a distinct non-financial asset class — expressly not cash, not currency, not a financial instrument — consistent with the Madras HC's property ruling.
  • Measure Class A at fair value through profit and loss; hold customer assets on the trust model — segregated assets off the custodian's balance sheet, commingled assets on it with a matching liability (the lesson of WazirX).
  • A cheap transition: a cumulative adjustment to opening retained earnings, no restatement.

What it does not do

  • It does not make any VDA legal tender or a unit of account — books stay in rupees.
  • It does not alter the RBI's monetary role, SEBI or exchange listing policy, or the 30% / 1% tax architecture. Measurement is representation, not endorsement.

The path

  • Step 1 (0–12 months): an ICAI Guidance Note — no legislative change, immediately usable by auditors.
  • Step 2 (12–36 months): a limited-scope Ind AS, endorsed by NFRA and notified by MCA.

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