On the 1st of October, the Central Bank of Nigeria (CBN) will be launching the digital currenty known as E-Naira and a lot of professionals are already considering the implications of this new development. For example, this is a question posed by the Accounting Yard on this hot and trending subject: “The implications of the recent adoption of Blockchain technology as a medium of exchange (E-Naira) by Nigeria has a lot of uncertainties. What are your thoughts on the implication of it’s adoption on Accounting in Nigeria?”

Here is my response:

The honest truth is that from accounting and financial reporting perspective, there’s no significant difference between E-Naira and existing physical fiat currency and it is certainly not a cryptocurrency based on the following reasons:

1. While all cryptocurrencies are digital currency, not all digital currencies are cryptocurrency. The E-Naira is simply the digital version of our existing Naira notes.

2. The E-Naira will be centrally regulated and issued by the CBN while cryptocurrency is decentralized and have no regulatory authority.

3. Cryptocurrency is an interest bearing asset class while E-Naira is not.

4. As of now, cryptocurrency is not a unit of measurement in the financial statements, while E-Naira (just like naira) would remain a means of measurement in the financial statements.

5. Cryptocurrencies held as a store of value (i.e capital appreciation) is accounted for in line with IAS 38: Intangible assets; those held for trading is accounted for under IAS 2: Inventory; and from Miners perspective, IFRS 15. But E-Naira (or Naira) is treated under IAS 7.

In short, the E-Naira is almost in every sense not cryptocurrency and accountants should maintain the status quo.