The FASB Issues Cryptocurrency Asset Guidance

By Colin M. Hannifin, CPA, Business Assurance & Advisory Services Senior Manager

The FASB Issues Cryptocurrency Asset Guidance

New accounting standard for intangible assets

On December 13, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, which provides guidance for accounting for and disclosure of crypto assets.

This new standard applies to assets that meet the following criteria:

  1. Meet the definition of intangible assets as defined by the Accounting Standards Codification
  2. Do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets
  3. Are created or reside on a distributed ledger based on blockchain or similar technology
  4. Are secured through cryptography
  5. Are fungible
  6. Are not created or issued by the reporting entity or its related parties

Under the new standard, an entity is required to measure assets that meet the above criteria at fair value with changes recognized in net income each reporting period. Further, crypto assets measured at fair value are to be presented separately from other intangible assets on the balance sheet. Additionally, changes from the annual remeasurement of such assets should be presented separately from changes in the carrying amounts of other intangible assets on the income statement.

The standard also requires some specific disclosures, including:

  • The name, cost basis, fair value, and number of units for each significant crypto asset held, as well as the aggregate fair values and cost basis of crypto asset holdings that aren’t individually significant
  • The nature and remaining term of any contractual sale restrictions on particular crypto assets
  • A roll-forward of activity during the reporting period for aggregate crypto asset holdings
  • For any dispositions of crypto assets, the difference between the disposal price and the cost basis
  • The method for determining the cost basis of crypto assets

While this won’t apply to all digital assets, for those crypto assets that meet the criteria above, the new guidance will have a significant impact on those entities that hold, or are considering holding, certain crypto assets, such as Bitcoin.

The new guidance is effective for all entities for fiscal years beginning after December 15, 2024, with early adoption permitted. When the standard is adopted, the entity is required to record a cumulative effect adjustment to the opening balance of equity or net assets as of the beginning of the period of adoption.

Speak to your Keiter Opportunity Advisor regarding your specific situation if you believe any of these circumstances apply to you. Contact us at 804.747.0000 | Email.

FASB Update 2023-08 Crypto currency asset guidance - Virginia CPAs

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About the Author

Colin M. Hannifin

Colin M. Hannifin, CPA, Business Assurance & Advisory Services Senior Manager

Colin is a Business Assurance & Advisory Services Senior Manager at Keiter. He has significant experience in public accounting for both the not-for-profit and private sectors. Colin’s clients rely on him for sound advice and insights on accounting regulations and changes that may impact their business.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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