Accountants must understand risks of cryptocurrencies: ACCA
By Digital News Asia March 16, 2018
- High volatility makes it inherently risky and unstable
- It is funding a speculative bubble in other areas like Initial Coin Offerings
ACCA (the Association of Chartered Certified Accountants) has issued a new warning to professional accountants over the importance of maintaining an up-to-date understanding of developments in the fast-moving space of cryptocurrencies like Bitcoin.
According to Maggie McGhee, director of Professional Insights at ACCA, Bitcoin has at least three dimensions that are causes for concern.
Firstly, 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.
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.
Thirdly, it is funding a speculative bubble in other areas like Initial Coin Offerings (ICOs) with speculators chasing poorly formed business propositions.
McGhee feels that it is important, however, 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.
She goes on to explain that the global accountancy profession has an important role to play 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.
“In that context, ACCA 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,” concludes McGhee.
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