The Future of Fair Value Accounting in a Digital Economy
Simran
Professor, Department of Commerce, NIILM University, Kaithal
Abstract
The accelerating shift toward a digital economy, driven by advancements in technology, has fundamentally transformed the nature of assets, markets, and business models. In this changing environment, Fair Value Accounting (FVA) — which aims to measure assets and liabilities based on current market conditions — faces unprecedented challenges and opportunities. The emergence of digital assets such as cryptocurrencies, non-fungible tokens (NFTs), and decentralized finance (DeFi) products has exposed limitations in traditional valuation frameworks, highlighting issues related to market volatility, illiquidity, and the absence of standardized valuation practices. At the same time, technological innovations like artificial intelligence (AI), big data analytics, and blockchain technology offer new tools that can enhance the accuracy, transparency, and timeliness of fair value measurements. This paper critically examines the future trajectory of fair value accounting in a digitalized world, identifies the major obstacles in valuing digital assets, and explores the role of emerging technologies in addressing these gaps. By analyzing global regulatory responses and proposing strategic reforms, this study provides insights into how accounting standards must evolve to maintain relevance, reliability, and comparability in financial reporting. Ultimately, the paper argues for a proactive transformation of FVA practices, integrating dynamic digital valuation methods while preserving the core principles of accountability, transparency, and investor protection in an increasingly complex economic landscape.
Keywords: Decentralized finance, cryptocurrencies, non-fungible tokens, Fair Value
Impact Statement
As the digital economy continues to evolve, the role of fair value accounting is becoming increasingly critical in providing transparent, timely, and relevant financial information. With the rise of intangible assets, digital currencies, and rapidly shifting market dynamics, traditional historical cost accounting often fails to reflect the true economic value of digital enterprises. Fair value accounting offers a forward-looking measurement approach that enhances comparability and decision-making for stakeholders in tech-driven markets. However, it also presents challenges, including valuation uncertainty, volatility, and regulatory inconsistencies. The future of fair value accounting in a digital economy hinges on developing robust valuation frameworks, leveraging advanced data analytics, and aligning global accounting standards to ensure reliability, relevance, and investor confidence in financial reporting.
About The Author
Dr Simran is working as Professor, Department of commerce, NIILM University, kaithal She has 13 years of rich experience in leadership, curriculum development and teaching at school and higher education level. Her area of research is accounting, taxation, human resource management and teaching-learning. She has attended more than 70 conferences, seminars and workshops. She has presented her research in various National and International Conferences. She has been awarded with 8 prestigious Awards. Dr. Simran is working as Professor, Department of commerce, NIILM University, kaithal
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