Crypto at fair value under US GAAP

Which crypto assets are within ASU 2023-08?

ASU 2023-08 added Subtopic 350-60 to the Codification. An asset is within its scope only if it meets all six criteria:

• it meets the definition of an intangible asset;
• it does not give the holder enforceable rights to, or claims on, underlying goods, services or other assets;
• it is created or resides on a distributed ledger based on blockchain or similar technology;
• it is secured through cryptography;
• it is fungible; and
• it is not created or issued by the reporting entity or its related parties.

Bitcoin and ether generally qualify. Stablecoins that give holders a right to redeem for cash fail the second criterion, non-fungible tokens fail the fifth, and a company's own tokens fail the sixth, so they follow other guidance. See crypto assets under IFRS and stablecoins.

How are in-scope crypto assets measured and presented?

They are measured at fair value under ASC 820 at each reporting date, usually the quoted price in the principal market at the reporting time, with changes in fair value recognised in net income. They are presented on a separate line in the balance sheet, apart from other intangible assets, and the gains and losses are presented separately from changes in other intangible assets in the income statement. Crypto received as payment in the ordinary course of business and converted almost immediately into cash is an operating cash flow.

ASU 2023-08: adoption and the first year at fair value

A company with a calendar year end holds bitcoin bought for US$ 4,000 thousand. Under the old model, after impairments in earlier years, it was carried at 2,000 thousand at 31 December 2024. On adopting ASU 2023-08 on 1 January 2025, the holding's fair value is 9,000 thousand. At 31 December 2025 it is worth 8,000 thousand. The tax rate is 21%. The prices are illustrative.

On adoption, the company writes the bitcoin up from 2,000 to 9,000 thousand, an increase of 7,000 thousand. It is a cumulative-effect adjustment: opening retained earnings rise by 5,530 thousand after a deferred tax liability of 1,470 thousand, with no effect on 2025 net income. During 2025, the fall in fair value from 9,000 to 8,000 thousand is a loss of 1,000 thousand in net income, with a matching reduction in deferred tax. Under the old model, the company would have recognised a further impairment only if the price had fallen below its impaired carrying amount, and never the gain on adoption.

What must be disclosed?

For each significant crypto holding, companies disclose its name, cost basis, fair value and number of units, and the totals for holdings that are not individually significant. They disclose any contractual sale restrictions, and give an annual reconciliation of the opening and closing balances, showing purchases, disposals, and gains and losses, with realised gains and losses on disposals. They also explain how cost basis is determined, for example first-in, first-out or specific identification.

How does deferred tax work?

For US tax, crypto is property and gains or losses are generally taxed only when it is sold or exchanged, so the tax basis stays at cost. Fair value increases in the accounts above the tax basis create a deferred tax liability; decreases below it create a deferred tax asset, which may need a valuation allowance if the company does not expect to be able to use the capital losses. See deferred tax.

What about crypto outside the scope?

Assets that fail one of the criteria are not measured at fair value under Subtopic 350-60. Many are still intangible assets under the general rules, at cost less impairment; stablecoins with a cash redemption right may be accounted for as financial assets; and the FASB's 2026 proposal on stablecoins as cash equivalents would apply to some of them. Crypto held for customers follows the safeguarding guidance. See safeguarding customers' crypto.

How does this compare with IFRS?

IFRS has no equivalent. Most IFRS holders account for crypto under IAS 38 at cost less impairment, or at revalued amounts with gains in other comprehensive income if there is an active market; only commodity broker-traders measure it at fair value less costs to sell through profit or loss under IAS 2. So the same holding can produce a gain in US GAAP net income and nothing in IFRS profit. See fintech accounting.

This guide is general information. It is not tax or legal advice for your situation.