High Court Case Tests Legality of Cryptocurrency Valuation

A recent High Court case in Australia is testing whether Bitcoin is considered property under common law, which could have significant implications for how cryptocurrency is taxed and valued.

The case has highlighted the challenges that SMSF auditors face when trying to verify the existence and value of cryptocurrencies held by funds.

SMSF auditor Saul explained that when crypto assets are moved into cold storage, the auditor often receives a document that is essentially an algorithm indicating the number of coins a fund holds, but does not provide proof of ownership or authenticity.

This creates significant challenges for auditors, who must satisfy key audit assertions such as existence, ownership, valuation, recoverability and liquidity to deliver an audit opinion. With many large institutions positioning themselves for the long-term growth of cryptocurrency, it is essential that auditors understand this asset class.