Definition ∞ A valuation standard is a consistent methodology or set of principles used to determine the economic worth of a digital asset. Unlike traditional assets with established accounting rules, digital assets often lack universally accepted valuation standards, leading to varied approaches. These standards are crucial for financial reporting, investment analysis, and regulatory compliance.
Context ∞ The absence of a uniform valuation standard for digital assets presents a significant challenge for investors, auditors, and regulators. Efforts are underway to develop more standardized accounting and appraisal methods that account for the unique characteristics of cryptocurrencies and tokens. Establishing clear standards is vital for increasing market transparency and institutional participation.
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