ACCA: Accountancy profession must better understand cryptocurrency risk

ACCA says it is vital for accountants to develop their digital understanding and their ethical responsibilities.

The Association of Chartered Certified Accountants (ACCA) has issued a warning to professional accountants over the importance of maintaining an up-to-date understanding of developments in the fast-moving space of cryptocurrencies, such as Bitcoin.

Maggie McGhee, director of Professional Insights at ACCA, says: 

"Bitcoin has at least three dimensions that are causes for concern. Firstly, its pseudonymous nature means that while one may identify the address a given payment goes to, it is not possible to confirm the identity of the underlying beneficiary. This is an obvious risk for money laundering, terrorist financing and the funding of other types of illegal activities. Secondly, its high volatility makes it inherently risky and unstable. Thirdly, it is funding a speculative bubble in other areas like Initial Coin Offerings (ICOs), with speculators chasing poorly formed business propositions.”

McGhee notes that it is important, however, to avoid blaming the house for the faults of the people living in it. The underlying blockchain technology behind Bitcoin (distributed ledger) could revolutionise how financial transactions are done and have a positive impact on business globally, she says. Such potential must be viewed separately from the risks of Bitcoin.

McGhee adds:

"The global accountancy profession has an important role to play in enabling stable economies and secure societies where consumers are not exploited. As new technologies become adopted, it is vital that professional accountants develop their digital understanding alongside their ethical responsibilities to flag areas of concern. In that context, ACCA supports a close relationship between regulators and the accountancy profession to ensure that a robust regulatory approach is crafted, and refined as developments emerge, so that it is fit-for-purpose in a digital age.