FASB Draws the Boundary for Its Crypto Accounting Project

The Financial Accounting Standards Board on August 31, 2022 unanimously defined which assets would fall within its developing project on crypto accounting and disclosure. The decision gave the project a deliberately narrow boundary: fungible, cryptographically secured assets residing on a blockchain and treated as intangible assets under U.S. generally accepted accounting principles.

The 7-0 vote did not create a new accounting standard or decide how covered assets should be valued. It did, however, establish the population of assets for which FASB intended to consider new rules—an important step for companies holding bitcoin, ether and similar assets on their balance sheets.

Five tests for inclusion

FASB’s official minutes state that an asset held by an entity would have to satisfy five criteria. It must meet the U.S. GAAP definition of an intangible asset; give its holder no enforceable rights to, or claims on, underlying goods, services or other assets; be created or reside on a distributed ledger or blockchain; be secured through cryptography; and be fungible.

The board separately voted 7-0 to include all types of entities within the project. That meant the deliberations were not confined to public companies, although FASB said it would continue evaluating whether later decisions were appropriate for every entity covered.

FASB also renamed the initiative from “Accounting for and Disclosure of Digital Assets” to “Accounting for and Disclosure of Crypto Assets.” The narrower title reflected the fact that many things represented digitally—including software, media and conventional financial instruments—were outside the project being considered.

What the boundary excluded

The fungibility requirement put non-fungible tokens outside the project’s scope. The restriction on enforceable claims also meant that some stablecoins or tokenized claims could be excluded, depending on the legal rights attached to a particular instrument. The board did not issue a list of approved or excluded tokens, so the criteria—not an asset’s marketing label—were the operative test.

That distinction mattered because “digital asset” was not a single accounting category. A token representing a security, contractual claim, redeemable asset or right to receive goods could already fall under other parts of GAAP. FASB’s August 31 action concentrated on crypto assets for which stakeholders argued that the existing intangible-asset model produced less useful financial statements.

Under the generally applied model at the time, companies outside specialized industry guidance usually treated cryptocurrencies as indefinite-lived intangible assets. Declines below carrying value could trigger impairment charges, while subsequent recoveries generally were not recognized before disposal. Preparers and financial-statement users had told FASB that this asymmetry could obscure the economics of volatile, actively traded holdings.

Measurement remained unresolved

The board’s action should therefore be read as a scope decision, not as approval of fair-value accounting. The official minutes explicitly identified potential measurement alternatives as a subject for a future meeting. Presentation, disclosure, transition and effective-date questions also remained unresolved on August 31, 2022.

The institutional significance was nevertheless substantial. By agreeing on a workable boundary, FASB moved beyond the question of whether to address crypto holdings and toward deciding how covered assets should appear in financial reports. For corporate treasurers, auditors and investors, the vote established which part of the digital-asset market was most likely to receive dedicated U.S. accounting guidance.

Later documentary context

FASB and IASB staff materials published on September 30, 2022 confirmed the five criteria and the project’s renaming. Those later materials clarify the August 31 record but do not change what the board had decided on the event date.