DLT-based Tokens Classification towards Accounting Regulation

Luz Parrondo

Abstract

Distributed Ledger Technologies (DLT) are distributed, secured and immutable ledgers that allow technology to intermediate and empower new ecosystem-based business models. DLT-based tokens digitally represent a wide variety of assets from securities to commodities or merely as means of payment within a DLT network. However, DLT-tokens may (alternatively or jointly) grant digital access to a DLT platform, serve as incentivation system or as a right for future consumption of goods or services. The aim of this paper is to provide a first definition, classification and guidance for accounting treatment of the DLT-based tokens. The paper proposes four factors as determinants to classify digital tokens as payment tokens, utility tokens and security tokens. Factor number one is the existence of a legal right against a counterparty; second, the existence of value stability; third, the existence of intrinsic value; and forth, existence of investment risk for the token-holder. First, the analysis suggests that tokens failing to comply with the first and second condition classify as payment tokens. These payment tokens subdivide into stablecoins and cryptocurrencies if alternatively satisfy the third (value stability) or fourth condition (investment risk). Second, tokens that satisfy the first, second and third condition classify as utility tokens. And finally, tokens satisfying the first, third and fourth condition classify as security tokens. Furthermore, the paper provides with initial guidance for accounting treatment in each category

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Paper Citation


in Harvard Style

Parrondo L. (2020). DLT-based Tokens Classification towards Accounting Regulation.In Proceedings of the 2nd International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB, ISBN 978-989-758-422-0, pages 15-26. DOI: 10.5220/0008937600150026


in Bibtex Style

@conference{femib20,
author={Luz Parrondo},
title={DLT-based Tokens Classification towards Accounting Regulation},
booktitle={Proceedings of the 2nd International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB,},
year={2020},
pages={15-26},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0008937600150026},
isbn={978-989-758-422-0},
}


in EndNote Style

TY - CONF

JO - Proceedings of the 2nd International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB,
TI - DLT-based Tokens Classification towards Accounting Regulation
SN - 978-989-758-422-0
AU - Parrondo L.
PY - 2020
SP - 15
EP - 26
DO - 10.5220/0008937600150026