FASB Cryptocurrency: A Practical Cryptocurrency Guide for Informed Decisions

What Changed?

Prior to ASU 2023-08, crypto assets were accounted for as indefinite-lived intangible assets under ASC 350. This meant they were measured at cost and only written down when impaired — price increases were not recognized until the asset was sold[reference:3].

Under the new standard, in-scope crypto assets must be measured at fair value each reporting period, with changes in fair value recognized in net income[reference:4][reference:5]. This allows both gains and losses to be reflected in earnings, providing a more accurate picture of a company's financial position.

• Meet the definition of an intangible asset as defined in the FASB Accounting Standards Codification[reference:8].
• Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets[reference:9].
• Are created or reside on a distributed ledger based on blockchain or similar technology[reference:10].
• Are secured through cryptography[reference:11].
• Are fungible — meaning each unit is interchangeable with another[reference:12].
• Are not created or issued by the reporting entity or its related parties[reference:13].

What's In Scope?

Bitcoin, Ethereum, and most major fungible cryptocurrencies are in scope[reference:14]. These assets meet all the criteria: they are intangible, blockchain-based, cryptographically secured, fungible, and typically not issued by the reporting entity.

What's Out of Scope?

• Stablecoins: Their treatment is currently under deliberation by the FASB. While some may qualify as cash equivalents, there are no specific accounting rules governing their treatment under U.S. GAAP[reference:15].
• NFTs: Non-fungible tokens are not fungible, so they fall outside the scope[reference:16].
• Wrapped tokens: The FASB is currently considering whether wrapped tokens should be included in scope[reference:17].
• Crypto assets issued by the reporting entity: These are explicitly excluded[reference:18].

How Fair Value Is Determined

For crypto assets, the fair value estimate should generally be based on the last trading price prior to the reporting date[reference:21]. This is typically the price from the principal market for that asset at the end of the reporting period.

• For assets traded on multiple exchanges, the price from the most active market is generally used.
• If the asset is not actively traded, other valuation techniques may be necessary.
• Entities should consider the specific facts and circumstances of their holdings.

Recognition of Changes in Fair Value

• Changes in fair value are recognized in net income — not in other comprehensive income (OCI)[reference:22].
• Both unrealized gains and unrealized losses are recorded in earnings each period[reference:23].
• This represents a significant departure from the previous impairment-only model.

Impact on Earnings Volatility

Because crypto prices can be highly volatile, fair value accounting will introduce earnings volatility for companies with significant crypto holdings. A sharp price increase or decrease will be reflected directly in net income, which may affect investor perceptions and analyst expectations.

Separate Presentation

• Crypto assets must be presented separately from other intangible assets on the balance sheet[reference:25][reference:26].
• They should not be commingled with other intangible assets that are not measured at fair value[reference:27].
• The aggregate amount of in-scope crypto assets measured at fair value should be presented as a separate line item[reference:28].

Disaggregation Options

• Entities may — but are not required to — present crypto assets on a more disaggregated basis, such as by individual crypto asset holding or intangible asset class[reference:29].
• If an entity chooses to disaggregate, it must do so consistently.
• The decision to disaggregate should consider whether it provides useful information to investors.

Example Balance Sheet Presentation

Significant Holdings Disclosure

For each significant crypto asset holding, companies must disclose[reference:31]:

• Name of the crypto asset
• Cost basis of the holding
• Fair value at the reporting date
• Number of units held

Annual Disclosures

At each annual reporting period, companies must provide[reference:32]:

• The method used to determine cost basis (e.g., FIFO, specific identification)
• A reconciliation of activity during the period
• Details about additions to holdings
• Details about dispositions and realized gains or losses

Interim Disclosures

At interim reporting periods, companies must disclose significant holdings and any restrictions on the sale of crypto assets[reference:33].

Contractual Sale Restrictions

Entities must disclose any contractual sale restrictions that affect their crypto assets[reference:34].

Exemption for Quick Conversion

Entities that receive crypto assets as noncash consideration and convert them quickly to cash are exempt from certain reconciliation requirements[reference:35].

Effective Date

• ASU 2023-08 is effective for all entities for fiscal years beginning after December 15, 2024[reference:36][reference:37].
• This includes interim periods within those fiscal years[reference:38].
• For calendar-year entities, this means the standard is effective for the year beginning January 1, 2025.

Early Adoption

• Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance)[reference:39].
• If adopted in an interim period, the amendments must be adopted as of the beginning of the fiscal year that includes that interim period[reference:40].
• Many companies are choosing to implement the changes early to provide more relevant information to investors[reference:41].

Transition Method

• The amendments require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments[reference:42][reference:43].
• This means the impact of the new standard is recorded as an adjustment to beginning retained earnings, not as a charge to current period earnings.
• Entities should carefully calculate the cumulative effect of applying the new guidance.

Project 1: Accounting for Transfers of Crypto Assets

On November 19, 2025, the Board added a project to address the accounting for transfers of crypto assets[reference:46]. This project includes[reference:47]:

• Expanding the scope of Subtopic 350-60 to address wrapped tokens and receipt tokens[reference:48].
• Clarifying the derecognition guidance for crypto transfer arrangements to assess whether the control of a crypto asset has been transferred[reference:49].

At its April 15, 2026, meeting, the Board decided to include within the scope "crypto assets that provide the holder with a right to receive another crypto asset" and to provide an example of tabular disclosure illustrating that wrapped tokens, if significant, would be disclosed separately from other significant crypto asset holdings[reference:50].

Project 2: Cash Equivalents — Classification of Certain Digital Assets

The Board is also deliberating a project on the classification of certain digital assets as cash equivalents and related disclosure enhancements[reference:51].

Key decisions from the April 15, 2026, meeting include[reference:52]:

• Providing illustrative examples in Topic 230 (Statement of Cash Flows) to clarify whether certain digital assets such as stablecoins can meet the definition of cash equivalents[reference:53].
• Clarifying that an entity should consider compliance with relevant laws and regulations when creating a policy about which assets that satisfy the definition of "cash equivalents" will be treated as such[reference:54].

The Board emphasized that it does not intend to change the definition of cash equivalents[reference:55]. Instead, the examples will explain the rationale for how digital assets such as stablecoins do or do not qualify as cash equivalents[reference:56].

What This Means for Companies

• The crypto accounting landscape is still evolving.
• Companies should monitor FASB developments closely, especially regarding stablecoins and wrapped tokens.
• Future guidance may expand or clarify the scope of ASU 2023-08.

Note: The new treatment provides more timely and relevant information to investors but introduces greater earnings volatility.

• ☑️ Identify in-scope crypto assets: Review all crypto holdings against the six scope criteria[reference:64].
• ☑️ Determine cost basis: Establish a consistent method for determining cost basis (e.g., FIFO, specific identification)[reference:65].
• ☑️ Implement fair value measurement: Establish processes to measure fair value at each reporting date[reference:66].
• ☑️ Update balance sheet presentation: Ensure crypto assets are presented separately from other intangible assets[reference:67].
• ☑️ Prepare disclosures: Develop systems to track and disclose significant holdings, restrictions, and changes[reference:68].
• ☑️ Calculate cumulative-effect adjustment: Determine the impact on beginning retained earnings[reference:69].
• ☑️ Train accounting staff: Ensure the finance team understands the new requirements.
• ☑️ Engage auditors: Discuss implementation plans with external auditors early.
• ☑️ Monitor FASB developments: Stay informed about ongoing projects on transfers and cash equivalents.
• ☑️ Consider early adoption: Evaluate whether early adoption provides benefits for your stakeholders[reference:70].

This scenario demonstrates a systematic approach to implementation. The key is to address each requirement — scope, measurement, presentation, disclosure, and transition — in a structured manner.

Final Thoughts

FASB ASU 2023-08 represents a significant advancement in crypto asset accounting. By requiring fair value measurement and enhanced disclosures, it provides investors with more relevant and timely information about a company's crypto holdings.

However, the new standard also introduces complexity and earnings volatility. Companies must invest in systems, processes, and expertise to implement the requirements effectively. The FASB's ongoing projects on transfers and cash equivalents suggest that the crypto accounting landscape will continue to evolve.

By understanding the rules, preparing early, and seeking professional guidance, companies can navigate this new landscape with confidence and provide their stakeholders with the transparency they deserve.