In the previous article "Understanding Crypto Staking to Enhance Company Financials," we explained what is crypto staking. Following the article, we researched the accounting treatments of staking by two publicly traded companies, of which both companies adopt IFRS.
TL;DR
Galaxy Digital Holdings LP: Staking Rewards are part of Revenue
DigitalX: Staking Rewards are part of Other Income
Galaxy Digital Holdings LP is listed on the Toronto Stock Exchange ("TSX") under the ticker
"GLXY." It is a technology-driven diversified financial services and investment management firm that provides institutions with a full suite of scaled financial solutions spanning the digital assets ecosystem.
Galaxy Asset Management (GAM) has surpassed more than $10 billion in assets under management, cementing its status as one of the world’s largest digital asset managers.On June 26th, Galaxy Asset Management and State Street Global Advisors joined forces to introduce investors to the next evolution of digital asset investing.
Accounting Policy: Revenue is measured at fair value of the digital asset at contract inception.
2. DigitalX
DigitalX Limited shares are listed on the Australian Securities Exchange (ASX code: DCC).
It is growing a portfolio of digital finance products and services to transform the way investors and listed company customers originate, invest, and transact with their assets.
A technology and investment company focused on growing the blockchain economy through its digital asset funds management business, digital fintech and regtech products, and blockchain ventures.
Product team designs and develops blockchain technology applications for business and enterprise organisations.
Provides low-cost traditional asset management products for qualified investors looking to gain exposure to the growing alternative asset class of digital assets, including Bitcoin.
Commercialising Drawbridge, the company’s first regtech solution which is supporting listed companies to better manage their compliance and corporate governance policies. With Drawbridge, companies can manage employee and director share trading approvals in order to safeguard their reputations.
Accounting Policy: DigitalX recognizes this portion of income as other income. Furthermore, since the staking interest is in the form of cryptocurrency (ETH), it is recognized as non-cash interest income.
3. Conclusion
Staking rewards can be categorized as either revenue or other income. Businesses need to thoroughly examine their operations to make an informed decision. We hope that the insights from these two companies provide clarity on how publicly listed crypto entities handle their accounting.
About AEM Algorithm
AEM Algorithm (AEM) is an innovative accounting system provider, empowering Web3 businesses and accountants with advanced solutions and applications for accurate cryptocurrency transaction reporting and financial automation. Our flagship product, AEM Journaler, is a cutting-edge SaaS B2B accounting software that seamlessly integrates with Xero and Intuit QuickBooks. We are the only accounting platform offering a complimentary self-custody crypto wallet, AEM+, under active development.
Socials
Author
Winston Chan Winston Chan is a Core Contributor at Launch Factor, a leading web3 professional accounting firm. He specializes in integrating QuickBooks and Xero with crypto sub-ledgers and reconciling Web3 data for OTC exchanges. Winston holds a First Class Honors degree in Accountancy and an MBA from Nanyang Technological University. As a Chartered Accountant (Singapore), he has gained extensive experience working with esteemed institutions, including OKX, DigiFT, and KPMG. Contact: winston.lf@launchfactor.us Website: https://www.launchfactor.xyz/ |
Dino Liu Dino Liu is always eager to engage in discussions on achieving financial compliance within the Web3 industry. Contact: liuqiyuan2@gmail.com |