The legal consideration of Bitcoin - Part 5: Disclosure requirements

There is a requirement to account for Bitcoins. Depending on their intended use, Bitcoins are reported differently in the balance sheet. This has a direct effect on their valuation. In this fifth article, the disclosure requirements are addressed.

As the third and fourth article have shown, the treatment of Bitcoins in the annual financial statements depends on the particular purpose of use. Accordingly, according to Art. 959c para. 1 no. 1 of the Swiss Code of Obligations (OR), it must be explained in the appendix which principles are used in the treatment. Art. 959c para. 1 no. 2 of the OR also obliges to provide information, breakdowns, and explanations for balance sheet and profit and loss account positions in the appendix. If a company holds significant amounts of Bitcoins, it is obliged by Art. 959a para. 3 in conjunction with Art. 958c para. 1 no. 1 of the OR to report these stocks separately. Due to the fact that Bitcoins are completely decentralized in regulations and their price depends solely on supply and demand, they are subject to massive fluctuations in value. This leads to the need for such a relativization of the book values according to the specific date that only a disclosure creates the necessary balance sheet clarity.

If the valuation of Bitcoins takes place at the observable market price (cf. Part 4), according to Art. 960b para. 1 of the OR, it must be noted in the appendix about this valuation. If this valuation method is chosen, creating a fluctuation reserve as stipulated in Art. 960b para. 2 of the OR, it must be listed separately in the balance sheet or in the appendix.

If significant value adjustments occur after the balance sheet date, but still before the approval of the annual financial statements, consideration should be given to whether to disclose the financial effects as envisaged by Art. 959c para. 2 no. 13 of the OR.

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