Comprehensive analysis of non-fungible tokens valuation and accounting under IFRS: Challenges and artificial intelligence implications

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The emergence of non-fungible tokens (NFTs) has created a new market with significant implications for stakeholders, particularly in industries such as art, fashion, gaming, and real-world assets, leading to challenges in finance, financial pricing, financial management, risk management, and cryptocurrency issues. This research paper adopts a quantitative approach to provide a comprehensive analysis of the challenges associated with NFTs, including their impact on the art market, risks related to ownership rights, and proper financial statement treatment. Additionally, the paper examines the challenges of accounting for NFTs under the International Financial Reporting Standards (IFRS), including valuation, tax treatment, and accounting considerations. The use of artificial intelligence (AI) in creating, verifying, and authenticating NFTs, as well as detecting potential fraud and valuing them in the market, is also discussed. Finally, the paper provides recommendations for companies and accounting professionals on addressing the challenges associated with NFTs under IFRS. The research contributes to the ongoing debate on the best practices for NFT accounting, the evolving nature of digital assets, and the role of AI in this emerging market.

Keywords: Non-Fungible Tokens (NFTs), Art Market, Artificial Intelligence (AI), Financial Reporting, Valuation, IFRS

Authors’ individual contribution: Conceptualization — M.A. and H.U.U.; Methodology — M.A. and H.U.U.; Writing — Original Draft — M.A. and H.U.U.; Writing — Review & Editing — M.A. and H.U.U.; Visualization — H.U.U.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M16, M38, M40, M41

Received: 15.05.2023
Accepted: 14.08.2023
Published online: 17.08.2023

How to cite this paper: Akpan, M., & Ukwu, H. U. (2023). Comprehensive analysis of non-fungible tokens valuation and accounting under IFRS: Challenges and artificial intelligence implications. Risk Governance and Control: Financial Markets & Institutions, 13(3), 8–21. https://doi.org/10.22495/rgcv13i3p1