Purpose: This paper aims to provide an exploratory analysis of Non-Fungible Tokens (NFTs) valuation. NFTs are a new kind of digital asset born out of the disruptive technologies’ introduction (i.e., blockchain). A lot of small and medium enterprises (SMEs), as innovative start-ups, are involved in this domain. Nowadays, several issues in the evaluation field remain unclear. To fill this gap, this research adopts a holistic approach is crucial to draw a clear picture of the first-time accounting treatment of these new digital assets.
Design/methodology/approach: Using a structured approach, this research considers some of the state-of-the-art international practices and reviews some major scholars’ opinions on the matter. Particularly, the study analyses the main contributions provided by international entities (e.g., European Financial Reporting Advisory Group – EFRAG, Chartered Business Valuators institute – CBV, PriceWaterhouse-Coopers – PWC), digital operators, and academia.
Findings: Based on the two main strands defined for the NFT’s nature, NFTs valuation issues can be resumed in twofold. The first one that considers NFTs as intangible assets suggests following the traditional valuation approaches (cost, income, or market) that is already a part of international accounting standards. The second strand that considers NFTs as financial assets proposes a different valuation approach based on quantitative methods coming mainly from finance fundamentals.
Originality/value: The originality of this study includes the different NFT valuation approaches, which enrich the literature and can help SMEs in managing and accounting for this new kind of digital asset.
Keywords: Non-fungible token, valuation, Accounting, Disclosure
Paoloni P., Modaffari G., Manzo M. (2023). Non-Fungible Token valuation: State of the art and future insight, Financial Reporting, 2, 39-70. Doi: 10.3280/FR2023-002002
