Two Approaches to Illiquid Digital Asset Valuation.
Both are Level 3 compliant. One is more precise.
- Models: BSM, Finnerty, Ghaidarov
- Volatility inputs: 85% – 375%
- Concluded DLOM: 8% – 70%
- Single value anchor: last traded price
- Works well for liquid tokens with lock-ups
Convention, not a standard requirement under IFRS 13 or ASC 820.
- Protocol revenues, fees, staking yields
- Comparable protocol multiples
- Economic cost of replication
- Multiple methods, weighted per asset class
- Analogous to unlisted company valuation
A defensible corridor from independent methods.
Both approaches operate within the same regulatory framework. The standards IVA DIGITAL ASSET structures its valuations to meet:
International Valuation Standards 500.
Fair value methodology across all digital asset classes
IVS 500 is the financial instruments chapter within the International Valuation Standards (IVS) framework, published by the IVSC. Its fair value methodology covers inputs, models, and documentation requirements applicable across asset types.
Under IFRS and US GAAP, most digital assets are classified as intangible assets rather than financial instruments. IVS 500's valuation principles nonetheless provide the methodological foundation: market participant assumptions, orderly transaction conditions, and the selection between income, market, and cost approaches apply regardless of accounting classification. For security tokens, DeFi protocols, and structured instruments with contractual cash flows, the financial instrument framework applies directly.
IVS 500 is the primary international standard guiding IVA DIGITAL ASSET valuations, applicable across all digital asset classes. Its principles of market participant assumptions, orderly transaction conditions, and principal market identification translate directly into the methodology applied for each engagement.
IFRS 13: Fair Value Measurement.
The accounting framework for how fair value is defined and measured
IFRS 13 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. This exit-price concept governs how digital assets held on corporate balance sheets, fund portfolios, or investment structures are reported under international accounting standards.
The standard organizes inputs into a three-level hierarchy based on observability and reliability:
Unadjusted prices in active markets for identical assets. Bitcoin, Ether on major exchanges typically qualify.
Prices for similar assets, adjusted. Relevant for liquid tokens with limited exchange depth or comparable benchmarks.
Model-based. NFTs, illiquid DeFi positions, DAO treasury assets, and early-stage tokens often require Level 3 methodology.
For fund managers, auditors, and regulated entities, IFRS 13 compliance is not optional. IVA DIGITAL ASSET's opinions are structured specifically to satisfy the documentation and methodology requirements for all three levels.
ASC 820: Fair Value Measurement.
The US GAAP equivalent of IFRS 13
ASC 820, issued by FASB, mirrors the conceptual framework of IFRS 13 within US generally accepted accounting principles. It defines fair value, establishes the same Level 1/2/3 input hierarchy, and requires full disclosures for recurring and non-recurring measurements.
US-domiciled entities, funds reporting under US GAAP, and any entity with securities traded on US exchanges must apply ASC 820 when determining fair value for digital assets. The practical methodology is largely aligned with IFRS 13, but there are jurisdictional differences in disclosure requirements and the treatment of transaction costs.
IVA DIGITAL ASSET's valuation opinions can be structured for either IFRS 13 or ASC 820 compliance, or both simultaneously, depending on the client's reporting obligations.
IDW S1: Business Valuation.
The authoritative standard for German business valuations
IDW S1 is the standard issued by Germany's Institut der Wirtschaftsprüfer (IDW) governing business valuation engagements. It is the de facto benchmark for valuations used in German legal proceedings, shareholder disputes, mergers and acquisitions, and tax assessments.
For digital asset companies, DAO structures, and token-issuing entities subject to German law or reporting, IDW S1 provides the methodological framework for entity-level valuation. The income approach (Ertragswertverfahren), discounted cash flow methods, and comparable transaction analysis are all addressed under IDW S1.
When a valuation is needed for a digital asset business, rather than a specific token or protocol, IDW S1 applies. IVA DIGITAL ASSET's heritage in the IDW framework through IVA VALUATION & ADVISORY AG means this standard is not an add-on. It is foundational.
MiCAR & KARBV: Regulatory Frameworks.
The compliance layer for regulated entities in Europe
MiCAR (Markets in Crypto-Assets Regulation) is the EU's regulatory framework for digital assets, applicable in stages since 2024. It establishes requirements for crypto-asset service providers (CASPs), issuers of asset-referenced tokens and e-money tokens, and other regulated participants in EU digital asset markets.
Under MiCAR, regulated entities must maintain documented valuation processes for capital adequacy reporting, client reporting, and regulatory submissions. Valuations must be consistent, reproducible, and defensible. IVA DIGITAL ASSET's opinions are structured to satisfy these requirements, including alignment with the relevant Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) issued under MiCAR.
The KARBV (Kapitalanlage-Rechnungslegungs- und -Bewertungsverordnung) is an ordinance issued by BaFin on the basis of the German Investment Code (Kapitalanlagegesetzbuch). It governs the accounting, the valuation of assets and the determination of net asset value for German regulated investment funds. Where such funds, for example special AIFs, hold crypto assets, their valuation and NAV determination follow the KARBV. For fund NAV mandates with a German nexus, IVA DIGITAL ASSET aligns its valuations with the requirements of the KARBV.
Standards by Asset Class.
The applicable framework depends on the asset type, jurisdiction, and purpose of the engagement. This matrix shows the primary standards by asset class.
| Asset Class | Primary Standards | Typical Use Case |
|---|---|---|
|
Payment Token
e.g. Bitcoin, Litecoin
|
IVS 500 IFRS 13 ASC 820 MiCAR KARBV | Balance sheet reporting, fund NAV, M&A, tax |
|
Commodity / Utility Token
e.g. Ether, Filecoin
|
IVS 500 IFRS 13 ASC 820 MiCAR KARBV | Impairment testing, audit support, regulatory filing |
|
Security / Cashflow Token
e.g. tokenized equity, revenue tokens
|
IVS 500 IFRS 13 ASC 820 IDW S1 | Fairness opinion, transaction support, legal proceedings |
|
Stablecoin
e.g. USDC, DAI, EURC
|
IVS 500 IFRS 13 MiCAR (ART/EMT) KARBV | Reserve adequacy, issuer compliance, custody reporting |
|
NFT / Digital Right
e.g. art NFTs, IP licenses, in-game assets
|
IVS 500 IFRS 13 ASC 820 IDW S1 | Inheritance, donation, dispute, IP licensing |
|
DeFi Protocol / DAO
e.g. Uniswap, MakerDAO, Aave
|
IVS 500 IFRS 13 IDW S1 KARBV | Fund reporting, M&A, governance token valuation |
Standard applicability depends on the specific asset, jurisdiction, engagement purpose, and reporting framework. ASC 820 applies to US GAAP reporters; KARBV applies to German KAGB-regulated funds. The above reflects primary applicability in the most common scenarios. Final standard selection is always engagement-specific and determined in consultation with the client.