FASB Advanced Fair-Value Accounting for Corporate Crypto Holdings

The Financial Accounting Standards Board voted on September 6, 2023 to advance rules requiring qualifying crypto assets to be measured at fair value, with changes recognized in net income during each reporting period. The seven-member board then directed its staff, by a 7–0 vote, to draft a final Accounting Standards Update for a written ballot.

The decision addressed an accounting asymmetry that had complicated corporate ownership of bitcoin and other qualifying tokens. Under the cost-less-impairment model generally applied outside categories such as investment companies, a holder could be required to recognize a decline when an asset became impaired but could not recognize a subsequent recovery while continuing to hold it. Fair-value measurement would instead reflect both upward and downward changes through earnings.

The September 6 decisions were consequential but not yet final. FASB’s meeting record expressly classified them as tentative and said authoritative guidance would exist only after a formal written ballot. The board’s technical plan called for an update during the fourth quarter of 2023.

A defined, limited scope

The proposed treatment was not designed to encompass every token or blockchain-based instrument. Covered assets had to satisfy six criteria: classification as intangible assets; no enforceable rights to underlying goods, services or other assets; creation or residence on a blockchain or similar distributed-ledger technology; cryptographic security; fungibility; and issuance by someone other than the reporting entity or a related party.

That framework excluded assets failing any criterion. It therefore did not establish a universal accounting rule for nonfungible tokens, issuer-created tokens or instruments representing enforceable claims on other assets. Questions about particular token structures would still depend on applying the scope tests.

For assets inside the scope, the board affirmed fair-value measurement under Topic 820 by a 7–0 vote. It also unanimously supported separate balance-sheet presentation of covered crypto assets and separate income-statement presentation of their gains and losses from effects associated with other intangible assets.

Holdings and restrictions would become more visible

The board backed disclosures covering each significant crypto holding at annual and interim reporting dates. Companies would report the asset’s name, fair value, units held and cost basis. Less significant holdings could be aggregated into a single line showing their combined fair value and cost basis.

Entities would also disclose the fair value of covered assets restricted from sale, the nature and remaining duration of each restriction, and circumstances that could end it. An annual reconciliation would explain changes between opening and closing crypto-asset balances, subject to a limited exception for assets received as ordinary-course noncash consideration and converted almost immediately into cash.

These requirements were intended to make reported balances more economically current while preserving information about acquisition cost and activity. They did not eliminate valuation judgment, custody risk, liquidity constraints or the possibility that fair-value changes could make reported earnings more volatile.

Effective date remained prospective

FASB selected fiscal years beginning after December 15, 2024 as the effective period, including interim periods within those years, while permitting early adoption. The public-company effective-date vote was 7–0; the corresponding vote for other entities was 5–2.

Nothing decided on September 6 changed an entity’s financial statements immediately, and the meeting did not establish a cryptocurrency price response. No controlled event-window evidence supports attributing market movements to the accounting vote. The verified event was institutional: FASB completed its principal redeliberations and authorized preparation of a final standard that would replace one-way impairment accounting for qualifying corporate crypto holdings.