VALUATION MODELS FOR CRYPTO CURRENCIES: BRIDGING THE GAP BETWEEN MARKET VOLATILITY AND ACCOUNTING STANDARDS

In South Africa’s rapidly evolving fintech ecosystem, the valuation of crypto currencies has sparked urgent discourse due to volatile market behavior and the absence of harmonized accounting standards. This study is crucial as it addresses the mounting inconsistency in financial reporting stemming from fragmented valuation practices across firms engaged in crypto transactions. The objective was to examine the effect of crypto currency market dynamics-specifically behavioral drivers, regulatory environment, and technological infrastructure-on accounting valuation standards from 2020 to 2024, while accounting for macroeconomic conditions. Employing a fixed-effects panel regression model based on secondary data from 30 firms and institutions, the analysis revealed that behavioral drivers (β = 0.385, p< 0.001), technological infrastructure (β = 0.347, p< 0.001), and regulatory environment (β = 0.291, p = 0.002) all significantly influenced accounting valuation practices, with macroeconomic conditions (β = 0.204, p = 0.009) also playing a moderating role. The model explained 72% of the variation in valuation standards (R² = 0.72), while the correlation coefficient matrix indicated strong positive relationships, especially between behavioral drivers and valuation standards (r = 0.81). The findings confirm that market sentiment, legal clarity, and blockchain readiness are critical levers for consistent and transparent crypto accounting. Implications include the urgent need for South Africa to formalize crypto-specific accounting frameworks and leverage real-time data systems for dynamic revaluation. Based on these findings, the study recommends managerial integration of sentiment analytics, regulatory policy reforms, and investment in valuation technologies to improve financial transparency and reporting accuracy.