Accounting for USDC under IFRS: a practical guide for SMEs

A company collects its first invoice in USDC and the money lands within minutes. The question arrives the next morning, when the accountant opens the ledger and cannot tell which line of the balance sheet that balance belongs on. Is it cash? An investment? An intangible? The answer is not obvious, and most guides circulating on the topic oversimplify it.

At Soulbit Academy we handle this with the original document open, because a sloppy summary here turns into an audit note later. Soulbit is a stablecoin payments and treasury rail for businesses, not an accounting firm, and this article sets out the framework so the company can discuss it with its auditor on its own terms.

Why recording a USDC balance is not obvious

The root of the problem is that the accounting standards were written before the asset existed. There is no IFRS titled "stablecoins". What exists is a set of general definitions and an exercise in fitting the asset to them.

That fit depends on one prior question: does the balance give the company a contractual right against anybody? If it does, the analysis runs down the financial instruments path. If it does not, it runs toward intangible asset or inventory. Everything else follows from there.

It helps to understand the asset first. USDC is a digital dollar issued by Circle, backed by cash reserves and US Treasury bills. Its mechanics are explained in what USDC is and how it works for companies, and the comparison with other stablecoins in USDC vs USDT for companies.

What the IFRS Interpretations Committee said in 2019

The required reference is the agenda decision Holdings of Cryptocurrencies, from June 2019. Its content is narrower than it is usually cited as being.

The Committee concluded that IAS 2 Inventories applies to cryptocurrencies held for sale in the ordinary course of business and that, where IAS 2 does not apply, an entity applies IAS 38 Intangible Assets. Getting there meant ruling out two other classifications first.

It ruled out the financial asset. Under paragraph 11 of IAS 32, a financial asset is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset, a contractual right to exchange financial assets or liabilities, or certain contracts settled in the entity's own equity instruments. The Committee concluded that a holding of cryptocurrency meets none of those.

And it ruled out cash. Paragraph AG3 of IAS 32 describes cash as the medium of exchange and the basis on which all transactions are measured and recognised in financial statements. The Committee observed that it was not aware of any cryptocurrency used as the monetary unit for pricing to that extent, and concluded that it does not have the characteristics of cash.

The critical point: the Committee's definition does not describe USDC

Here is the nuance almost nobody quotes, and it is the most important part of this article.

The Committee did not speak about cryptoassets in general. It expressly delimited a subset with all of these characteristics: a digital or virtual currency recorded on a distributed ledger using cryptography for security, not issued by a jurisdictional authority or other party, and not giving rise to a contract between the holder and another party.

A reserve-backed stablecoin does not fit that description cleanly. It has an identifiable issuer and, depending on its terms, may give the holder some form of right against that issuer. Where a contractual right to receive cash exists, the IAS 32 conclusion changes direction and the analysis shifts toward financial instruments.

Does that mean the 2019 decision is useless here?

It is useful as a method rather than as an answer. It gives the correct order of questions: first whether a contractual right exists, then whether it is cash, then whether it is inventory, and finally whether it is an intangible. What it does not give is a ready-made conclusion for a USDC balance. The company forms that conclusion by analysing the specific terms of the asset, and supports it in writing before its auditor.

Question in the analysis	Standard reference	What the answer implies
Is there a contractual right to receive cash?	IAS 32 paragraph 11	If yes, the analysis runs through financial instruments
Is it cash?	IAS 32 paragraph AG3	Requires being a medium of exchange and a general pricing unit
Is it a non-monetary item?	IAS 21 paragraph 16	It is, where there is no right to a fixed or determinable number of currency units
Is it held for sale in the ordinary course?	IAS 2 paragraph 6	If so, it is recorded as inventory
Is it identifiable and separable?	IAS 38 paragraphs 8 and 12	Residual route: intangible asset
Was the judgement significant?	IAS 1 paragraph 122	Triggers disclosure of the judgement in the notes

The day-to-day bookkeeping

Once the route is settled, the daily work is more mechanical than it looks, provided it happens in the moment rather than at close.

Each collection is recorded at its gross amount, with the network fee on a separate expense line. Each conversion to fiat is recorded with its quote and receipt. And every movement carries the on-chain transaction identifier, which acts as verifiable support for the entry. The full procedure is in how to reconcile stablecoin payments in accounting, and the anatomy of a transaction in how an on-chain transaction works for accountants.

Event	What gets recorded	Supporting document
Collection of an invoice in USDC	Gross amount received and derecognition of the receivable	Invoice plus on-chain identifier
Network fee	Expense of the period, on a separate line	Transaction detail
Conversion to fiat	Balance derecognised and bank recognised, with any difference	Quote and conversion receipt
Payment to a supplier or payroll	Balance derecognised against the related obligation	Payment order and on-chain identifier
Measurement at reporting date	Per the chosen route and the entity's written policy	Approved technical memorandum
Relevant subsequent events	Assessment under IAS 10 paragraph 21	Note to the financial statements

Disclosures: what has to appear in the notes

Disclosures are where most companies fall short, and the agenda decision lists them precisely.

If the route is inventory, the disclosures in IAS 2 paragraphs 36 to 39 apply. If it is intangible, those in IAS 38 paragraphs 118 to 128. If the asset is measured at fair value, IFRS 13 paragraphs 91 to 99 apply on top.

Above all of them sits IAS 1 paragraph 122: the entity discloses the management judgements that had the most significant effect on the amounts recognised. A stablecoin balance classified after a non-trivial analysis is exactly that kind of judgement. And IAS 10 paragraph 21 requires disclosure of material non-adjusting events after the reporting period, with an estimate of the financial effect or a statement that none can be made.

What if the company reports under the IFRS for SMEs Standard?

Then it cannot carry the conclusions across unchanged. The agenda decision reasons on full IFRS Standards and cites IAS 2, IAS 32 and IAS 38. An entity under the SME standard should confirm with its auditor which section applies and how it interacts with the accounting rules of its country. In Colombia, for instance, the tax treatment runs separately, as covered in the DIAN and cryptocurrencies in a Colombian company.

What the rail solves and what stays with the accountant

It is worth closing by separating responsibilities, because confusion here is expensive.

Soulbit V1 provides the raw material for the records: stablecoin balances in USDC and USDT, fiat in USD, EUR and GBP, KYB verification, payment links, batch payments, conversion by quote on request, AML/KYT monitoring, institutional custody and a verifiable identifier for every movement. That makes orderly accounting possible.

What it does not do is the accounting. It does not classify the asset, choose the accounting policy, draft the notes or issue an opinion. It also does not deposit in local currency outside Colombia, and it offers no cards, no yield, no proprietary token and no native mobile app. The IFRS classification is the company's judgement, documented in a technical memorandum and discussed with its auditor before the close, not after it.