What is a cryptocurrency

Cryptocurrencies are decentralized digital assets that use cryptography to ensure the security of your transactions.

In addition, it uses blockchain technology as an accounting and distributed ledger that prevents fraud.

The most famous examples of cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Cardano (ADA) and Binance Coin (BNB).

Bitcoin

Bitcoin is the first digital currency created in the world and used for payments and receipts transactions without a financial institution, such as a bank, to intermediate the process.

The coin appeared in 2009 and was created by Satoshi Nakamoto, a pseudonym that remains a mystery to this day. No one knows if Satoshi Nakamoto is a person or a group of people, for example.

The fact is that the published article on bitcoin described the way cryptocurrencies worked – in this case, bitcoin specifically. The text also explained the system that records all operations carried out with the currency, as if it were a ledger. It’s called blockchain.

Can cryptocurrencies be company assets?

The Brazilian Ministry of Economy, at the end of 2020, through its National Department of Business Registration and Integration, confirmed that cryptocurrencies can be used to compose the share capital of a business.

In addition, in 2019, the Central Bank recognized cryptocurrencies as goods, passing the trading of these digital assets to be accounted for in the national trade balance.

Regarding the payment of Bitcoins and other cryptocurrencies in the share capital of companies, the Ministry of Economy stressed that the rules are the same applied to movable assets.

Taxes

According to RFB Normative Instruction No. 1,888, both individuals and legal entities must declare their earnings and transactions with cryptocurrencies.

In the case of an individual, earnings above BRL 35,000 from the sale of Bitcoins and cryptocurrencies apply:

• up to BRL 5 million profit: 15%
• above BRL 5 million up to BRL 10 million: 17.5%
• above BRL 10 million up to BRL 30 million: 20%
• above R$30 million: 22.5%.

On the other hand, taxation in companies has no exemption limit value, so any sale value will be treated as a sale of good or right, subject to capital gain.

• Simples Nacional the value of the gain follows these percentages:
  • up to BRL 5 million profit: 15%
  • above BRL 5 million up to BRL 10 million: 17.5%
  • above BRL 10 million up to BRL 30 million: 20%
  • above R$30 million: 22.5%.
• Presumed Profit: The value of the capital gain will be added to the IRPJ and CSLL calculation basis in the quarter in which the sale of cryptocurrencies took place. 

How to account for these assets in the company?

Although there is still no Law, standard or CPC specifically for cryptocurrencies, the accountant should consider the interpretation of existing accounting rules, such as:

• CPC 00: Conceptual Framework for Financial Reporting;
• CPC 03: Statement of cash flow;
• CPC 04: Intangible Assets;
• CPC 16: Inventories;
• CPC 26: Presentation of Financial Statements
• CPC 39, 40 and 48: Financial instruments;
• Article 179 of Law No. 6,404/76, Brazilian Corporate Law.