Not So New Kid on the Block: Accounting and Valuation Aspects of Non-Fungible Tokens (NFTs)

Abstract

Aggregated trading volume in February 2023 across the leading six NFT marketplaces totalled USD 1.89 billion. This reflects a continuing positive trajectory, marked by a 91.9% month-on-month (MoM) growth from January 2023, where NFT trading volume amounted to USD 987.9 million. This study conducts a systematic review and textual analysis of industry and academic articles on NFTs primarily related to Accounting, Finance, and Information Systems where the NFT is treated as a tradable digital asset. The sample period spans 2012 to 30 June 2023, using an initial set of 5549 and a final set of 146 articles. In addition, the authors develop an NFT valuation framework, using Scopus bibliometrics data and public domain materials, that can aid in the fair valuation of NFTs and understanding their accounting implications. We further examine the accounting implications of NFTs in terms of international accounting standards, fair value recognition, taxation, auditing, and the metaverse. NFTs have the potential to become a cross-technology and cross-field topic, attracting interest from auditors, accountants, financial institutions, accounting professional bodies, regulators, governments, and investors.

Review of Blockchain Tokens Creation and Valuation

“…However, the tokens' valuation and price determinants are still challenging due to factors such as lack of intrinsic value being exposed to speculative processes, volatility, different valuation dynamics based on their utility, lack of regulation, etc. [21,22]. This makes them risky, as there is no oversight to ensure that the tokens are being traded fairly and transparently.…”