Compliance requirements for cryptocurrencies have shifted in Asia, with key financial hubs changing rules and requirements as money flows into low-tax and progressive crypto jurisdictions like Singapore, Hong Kong SAR and Malaysia.
Hong Kong has maintained a 0% capital gains tax on crypto assets, as have Singapore and Malaysia. But while these three jurisdictions do not tax capital gains on crypto, profits can still be taxed if trading looks like it is done as part of the regular course of business, says Daniel Rabetti, assistant professor in accounting and finance at the National University of Singapore Business School.
‘It is important for accountants to apply judgment-based frameworks’
‘That means accountants now have to document not just what a client earned, but how and where they earned it,’ says Rabetti.
Rules tightening
Over the past couple of years, crypto rules have tightened. Singapore’s central bank now mandates asset segregation for crypto service providers. Hong Kong has implemented comprehensive exchange licensing requirements. Malaysia, in turn, has updated its digital asset guidelines. All of these create additional audit obligations around asset custody, anti-money laundering compliance and travel-rule standards, among others.
Travel-rule standards are at the core of this complexity. The standards, aimed at preventing money laundering and terrorism financing, mean that accountants need to verify proper compliance by crypto service providers and check that all required customer information is collected and transmitted for qualifying transactions.
‘Accountants must reconcile diverse regulatory frameworks and tax treatments across multiple countries, while also managing the technological demands of tracking and verifying digital assets,’ says Anton Ruddenklau, head of financial services at KPMG in Singapore.
Digital assets can now be classed differently – from commodities and securities to payment tokens – depending on the jurisdiction, affecting tax treatments and reporting obligations.
New capabilities
Accountants are responding to the ongoing changes by building new capabilities, Ruddenklau says, updating audit methodologies and collaborating with legal and compliance teams: ‘It is important for accountants to apply judgment-based frameworks and stay ahead of the latest accounting standards guidance, as well as blockchain analytics.’
But despite all the visible changes under way, Asia has been moving relatively slowly compared with other regions. Singapore, Hong Kong and Malaysia are all following IFRS rules that treat crypto as intangible assets, putting them more like patents, rather than cash, says Rabetti. ‘That means firms may have to write down losses when prices fall, but can’t book gains until they sell.’
‘Firms that prepare early will have an edge’
While some jurisdictions like the US have switched to a fair value model, allowing companies to record crypto at market value through profit and loss, Asia does not have an equivalent approach, leaving accountants to fill in the gaps.
‘Preparing for digital-asset accounting means treating crypto with the same discipline as traditional finance,’ Rabetti adds. ‘The demand for digital-asset accounting is only going to rise, and firms that prepare early will have an edge.’
Many firms set clear valuation policies and build impairment triggers around big price moves, Rabetti says, and disclose in detail how coins and tokens are valued. ‘For revenues from mining or staking, firms map activities onto existing revenue-recognition rules,’ he adds. ‘It keeps reports credible until clearer standards arrive.’
Firms must also be proactive to anticipate emerging challenges, as regulatory clarity continues to improve, Ruddenklau says. ‘In the absence of unified standards under IFRS, professionals are navigating the emerging landscape with a mix of internal policies, industry guidance and emerging global frameworks.’
‘One of the biggest risks in digital-asset reporting is inconsistency’
Price volatility can complicate valuation and impairment, and businesses that rely on traditional tools may also require better integration with cryptocurrencies, Ruddenklau adds. ‘Accountants need to apply good judgment to challenge management’s assumptions and valuation techniques, evaluate completeness and accuracy of disclosures, and avoid premature recognition of gains unless supported by market data.’
Withstand scrutiny
Accountants need to go beyond just knowing the rules, and build systems that can withstand scrutiny from stakeholders, says Rabetti.
Firms need to write clear playbooks that spell out how assets are classified.
‘One of the biggest risks in digital-asset reporting is inconsistency. If one part of a company values crypto holdings at cost and another at market price, the numbers become unreliable,’ he says. ‘A well-documented policy doesn’t just keep books tidy; it also shows regulators and investors that the company takes governance seriously.’
‘Accountants play a vital role in explaining that “low tax” is not the same as “no tax”’
Firms will also have to invest in auditability, to ensure that auditors know where the assets are and can control them, and that the asset can be liquidated and moved. ‘Companies should maintain up-to-date wallet inventories, implement multi-signature approval processes and use third-party custodians with strong independent audits,’ Rabetti adds.
In addition, accountants will have to be trained so they can trace transactions on a blockchain explorer and check compliance with anti-money laundering rules. ‘Without this skill, accountants risk missing irregularities,’ he says. ‘Firms can also encourage staff to gain hands-on familiarity with blockchain tools.’
Clients will also need to know about taxation requirements on trading profit, so that they do not overlook new rules. ‘Accountants play a vital role in explaining that “low tax” is not the same as “no tax”,’ Rabetti adds. ‘Helping clients document their intent, holding patterns, and operational substance can prevent nasty surprises later.’
To support clients navigating the new cryptocurrency landscape, KPMG has developed a comprehensive suite of digital asset service offerings, says Ruddenklau. ‘We have built a robust ecosystem of digital assets capabilities across audit, advisory, tax and consulting services.’
But even as major firms move to offer updated services and demand grows, the bottleneck will move beyond just standards, to talent and people, says Rabetti. ‘Firms need accountants who are comfortable working with crypto wallets, blockchain records and digital-asset disclosures.
‘The message for accountants is clear: digital assets are no longer fringe,’ he adds. ‘The firms that succeed will be those that pair technical knowledge of blockchain with the rigour of established accounting principles.’
