By Jim McFie, a Fellow of ICPAK
Do I Need to Know Anything About Them? Of What Relevance Are They toAccountants?
With the rise of Central Bank Digital Currencies (CBDCs), governments have “surgical precision” in tracking transactions, meaning non-compliance is almost immediately visible.
A digital asset is a digital record or representation of value that is stored and tracked on a digital distributed ledger, most commonly a blockchain. A blockchain is a shared, digital ledger that stores information across a network of computers rather than one central server. It records transactions in “blocks” that are securely linked together, making it nearly impossible to alter or cheat the system. Instead of a bank holding one ledger, everyone in the network has a copy, ensuring transparency and trust. Transactions are gathered into “blocks.” Once filled, a block is added to the “chain” of previous records in chronological order. Once data is added, the data cannot be changed or deleted. Any tampering is easily detected because the records are linked by complex mathematics or cryptography. New additions to the chain are agreed upon by the network, not by a single authority. While the blockchain is best known for its crucial role in cryptocurrency systems, maintaining a secure and decentralized record of transactions, blockchains are not limited to cryptocurrency uses. Blockchains can be used to make data in any industry immutable, meaning it cannot be altered.
The world of finance is currently at a historic tipping point. As of 2026, digital assets have transitioned from speculative “internet money” to the foundational architecture of the global financial system. For the modern accountant, these are not just line items on a balance sheet—they represent a total shift in how value is recorded, audited, and taxed.
The phrase, “a digital asset” has expanded far beyond Bitcoin but let us consider the Bitcoin first. The Bitcoin is a decentralized digital payment system and an alternative to fiat currency, serving as an investment asset for investors seeking returns through price appreciation. A fiat currency is a national currency not backed by a physical commodity, such as gold or silver, but by government decree and public trust: it is declared legal tender, with its value derived from the issuing authority’s stability and economic strength, rather than intrinsic value. The Bitcoin utilizes peer-to-peer transfers on a digital network that records and secures all transactions. In recent years, Bitcoin has increasingly been accessed through regulated investment products, such as spot Bitcoin exchange-traded funds (ETFs), expanding its reach beyond crypto-native platforms. There is a lot going on behind the scenes in the Bitcoin network, but space and time prevent me from going into any depth about it. After surpassing Kes 12.9 million in late 2024, the Bitcoin has continued to experience sharp price swings, underscoring both its growth potential but also its volatility. As I write this article, the value of Bitcoin is Kes 9.6 million.
Digital assets are generally categorized into four primary buckets: (i) Payment Tokens or Cryptocurrencies: These are assets like Bitcoin or Litecoin designed to act as a medium of exchange or a store of value; (ii) Stablecoins: Digital tokens pegged to a stable asset, such as the US Dollar; these have become the “digital oil” for corporate transactions due to their low volatility; (iii) Tokenized Real-World Assets (RWAs): This is the “everything-on-a-chain” movement. It involves creating digital versions of traditional assets like real estate, stocks, bonds, or even physical inventory. When one buys shares on the Nairobi Securities Exchange, one does so through a Central Depository System (CDS) account, which electronically records one’s ownership.
Following a purchase, one receives a transaction confirmation from one’s broker. All shares are held electronically in a CDS account opened through a licensed stockbroker, serving as the official record of ownership. The stockbroker provides one with a statement showing one’s transaction history and current portfolio holdings. One can track one’s shares in real-time, including the number of shares and their value, via authorized apps like the ZiiDi Trader app or broker-specific platforms. Ownership is confirmed when one receives dividends directly into one’s bank account or M-PESA as listed in one’s CDS records. (iv) Central Bank Digital Currencies (CBDCs): Government-issued digital versions of fiat currency (like the Digital Yuan) that represent a direct claim on a central bank.
In 2026, the institutional adoption of digital assets is reaching new heights. Estimates suggest that over 75% of institutions in the US are now increasing their allocations to digital assets. This is not just for investment firms; companies are now using stablecoins for vendor payments, tokenizing their own supply chains for better transparency, and holding digital assets as treasury reserves.
Business leaders, investors, and professionals need to understand digital assets because: (i) Speed and Cost are minimized. Transactions that used to take three days (T+3) can now be settled in seconds (T+0). (ii) Programmability: “Smart contracts” allow money to move automatically when certain conditions are met (e.g., an insurance payout triggered automatically by a weather event). (iii) Regulatory Clarity: In 2026 in the US, major frameworks like the CLARITY Act and the SEC’s Crypto Task Force guidance have provided the legal guardrails that were missing in the previous decade.
For the accounting profession, digital assets are the most significant disruption since the move from paper ledgers to spreadsheets. It is not just about “counting the coins”; it is about a new paradigm of Triple-Entry Accounting. One of the biggest shifts in 2026 is the divergence between US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRSs) in valuing digital assets. ASU 2023-08 (Intangibles—Goodwill and Other—Crypto Assets) promulgated by the Financial Accounting Standards Board (FASB) updates US GAAP and mandates fair value measurement for certain crypto assets, requiring changes in value to be recorded in net income. It improves financial reporting by replacing the cost-less-impairment model with fair value, enhancing transparency for assets like Bitcoin. Effective for fiscal years beginning after December 15, 2024, it requires separate balance sheet presentation and enhanced disclosures. Under IFRS, many digital assets are still treated as intangible assets (IAS 38) or inventory (IAS 2). This often requires measuring them at cost less impairment, which can lead to a “valuation gap” where the balance sheet does not reflect the true market value.
In a traditional audit, one verifies the bank account number by looking at a bank statement and by obtaining separate confirmation from the bank itself. In the digital asset world, there is no bank. Accountants must now first verify Private Key Management: does the client actually control the “keys” to the wallet? Then the auditor carries out On-Chain Verification, which is using block explorers to prove that the assets exist on the blockchain at the stroke of midnight on the reporting date.
Some tax authorities are no longer playing catch-up: KRA may need to do so. The Crypto-Asset Reporting Framework (CARF) is now a global standard. Every time a company uses a stablecoin to buy a service, it may trigger a capital gain or loss depending on the price of the coin at that moment. This requires meticulous, automated record-keeping. With the rise of Central Bank Digital Currencies (CBDCs), governments have “surgical precision” in tracking transactions, meaning non-compliance is almost immediately visible.
Because blockchain is an “immutable ledger” (meaning it cannot be changed once written), the role of the auditor is shifting from historical verification to real-time monitoring. If the data on the blockchain is reliable, the risk of “accuracy” errors drops significantly, allowing accountants to focus on higher-level strategic advisory roles. In “Traditional Accounting”, settlement was in T+2 or T+3 days; verification was achieved in monthly bank reconciliations; valuation was normally at historical cost; control was over internal database access. In “Digital Asset Accounting”, settlement is instantaneous – (T+0); verification is real-time on-chain audits; valuation (in the US) is at fair value (Mark-to-Market); and controls are over the private key and custody protocols.
Digital assets are no longer a peripheral experiment; they are becoming the “architecture of global finance.” For accountants, this means the toolkit must evolve. Success in the years beyond 2026 requires a blend of traditional financial expertise and a deep understanding of cryptographic protocols and decentralized finance (DeFi). The Kenyan habit of leaving things to the last moment, the “wait and see” era is over.
Zipporah Mungai Chege, the Chief Finance Officer of ICEA Lion Insurance, a position she has held since August 2016, can tell you all about that tendency.
Whether it is managing a company’s stablecoin treasury or auditing a tokenized real estate fund, the digital asset economy is here, and it is being written in code. Prepare yourself for it.
