Accounting meets metaverse: navigating the intersection between the real and virtual worlds
Journal of Financial Reporting and Accounting
ISSN: 1985-2517
Article publication date: 27 June 2023
Issue publication date: 29 April 2024
Abstract
Purpose
The “metaverse” is the new buzzword. With the phenomenal growth of the metaverse comes accounting, taxation and jurisdictional challenges, which business and governments have yet to fully address. This paper aims to highlight and rationalise the lack of regulatory framework and multiplicity of jurisdictions on metaverse transactions. This paper addresses some of the complications with respect to accounting and taxation in virtual environments.
Design/methodology/approach
This study relies on secondary data and emerging literature to understand the multiplicity of jurisdiction and complexity of the accounting transactions. The concept of the metaverse is rapidly evolving, and this study uses extant literature to provide the foundation for understanding the key challenges relating to accounting and taxation.
Findings
Concepts of revenue recognition and deferment are challenged by the transactions in the metaverse. There are novel applications, underpinned by emerging technologies and blockchain supporting new crypto assets, such as non-fungible tokens and other decentralised finance (DeFi) tools; however, the caveats of anonymity and jurisdictional issues persist. The paper suggests that the industry must adapt to the unique reporting requirements of these assets and develop new standards for evaluating their value for financial reporting purposes. The paper emphasises the need for a case-based approach in the absence of standardised regulations for the accounting industry in the metaverse.
Originality/value
This paper adds original contributions to extant literature of the metaverse and advances ongoing debates into the accounting and taxation issues pertinent to the metaverse and DeFi.
Keywords
Acknowledgements
The authors would like to thank the anonymous reviewers for their supportive comments on previous versions of this paper.
Funding: The authors received no financial support for the research, authorship and/or publication of this article.
Citation
Pandey, D. and Gilmour, P. (2024), "Accounting meets metaverse: navigating the intersection between the real and virtual worlds", Journal of Financial Reporting and Accounting, Vol. 22 No. 2, pp. 211-226. https://doi.org/10.1108/JFRA-03-2023-0157
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited