Navigating Accounting for Digital Assets: The Mediating Role of Regulatory Clarity in Enhancing Financial Reporting Quality in Malaysia

Siti Sakinah Azizan, Marzlin Marzuki, Muslimah Mohd Jamil and Roshidah Safeei
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Siti Sakinah Azizan: Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia
Marzlin Marzuki: Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia
Muslimah Mohd Jamil: Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia
Roshidah Safeei: Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 9, 3829-3837

Abstract: The emergence of digital resources in the form of cryptocurrencies has presented major challenges to financial reporting particularly in emerging economies like Malaysia where regulatory structures are still developing. One of the key problems is the lack of standardized accounting treatments, which contributes to inconsistencies in recognition, measurement, and disclosure, compromising the quality of financial reporting and stakeholder confidence. This study aims to develop a conceptual framework to examine the relationship between accounting for digital assets and financial reporting quality, with regulatory clarity as the mediating variable. The study utilizes a narrative review approach and draws conclusions based on the results of 22 peer-reviewed articles acquired through the Scopus database, guided by the Institutional Theory, and backed by the Decision-Usefulness Theory. Several themes identified in the review are the benefits of IFRS alignment, issues that exist in classification and measurement of digital assets, and the importance of transparent and effective regulatory frameworks to enhance transparency and comparability. Studies have indicated that the absence of regulatory transparency can increase reporting disparities and decrease the usefulness of financial disclosures. Nonetheless, companies are in a better position to generate quality, transparent and credible reporting, which has enforceable and clearly defined rules. Theoretically, this study extends Institutional Theory to the evolving domain of digital asset reporting. Practically, it calls on Malaysian regulators and standard-setters to issue comprehensive guidance for digital assets. The proposed framework not only provides a foundation for future empirical research but also supports Malaysia’s strategic objective of becoming a regional leader in digital finance through strengthened financial reporting standards and practices.

Date: 2025
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