Crypto assets: IAS 38 or IAS 2

Why are crypto assets not cash or financial assets?

Cash under IFRS means currency used as a medium of exchange and the monetary unit for pricing goods and services. Most crypto assets are not widely used that way, so they are not cash. A financial asset requires a contractual right to receive cash or another financial asset, and holding bitcoin gives no right against anyone. The IFRS Interpretations Committee therefore concluded in June 2019 that holdings of cryptocurrencies are intangible assets, identifiable non-monetary assets without physical substance, unless they are held for sale in the ordinary course of business. See IAS 38 intangibles and fintech accounting.

How does IAS 38 apply to crypto assets?

Crypto assets are recognised at cost. After that, the holder chooses, for each class of intangible asset, between two models:

• Cost model: carried at cost less impairment. Crypto is usually treated as having an indefinite useful life, so it is not amortised but tested for impairment at least annually and whenever there is an indication, such as a price fall. Impairments can be reversed if prices recover, but never above cost.
• Revaluation model: carried at fair value, but only if there is an active market, meaning transactions with sufficient frequency and volume to give pricing information on an ongoing basis, which is typically the case for major cryptocurrencies. Increases go to other comprehensive income, decreases go to profit or loss once any surplus for that asset is used up, and the surplus is never recycled to profit or loss on sale.

Where specific units cannot be tracked, an inventory-style cost formula such as first-in, first-out or weighted average is applied consistently. See the revaluation model.

Crypto assets: two years of price movements

A company buys 10 bitcoin at US$ 60,000 each, 600 thousand, as a treasury investment. At the end of year 1 the price is 80,000, so the holding is worth 800 thousand; at the end of year 2 it has fallen to 50,000, 500 thousand. Costs to sell are ignored.

Under the cost model, the 200 thousand rise in year 1 is invisible, and the year 2 fall below cost is an impairment loss of 100 thousand. Under the revaluation model, the rise goes to other comprehensive income and the fall first reverses it, with only the fall below cost in profit or loss. Under fair value through profit or loss, both movements hit profit. The balance sheet at the end of year 2 is the same in all three cases, but profit in each year is very different.

When are crypto assets inventory under IAS 2?

Crypto held for sale in the ordinary course of business, for example by a market maker or a business that buys and sells crypto for customers, is inventory. Inventory is normally measured at the lower of cost and net realisable value, but commodity broker-traders, which buy to sell in the near future and profit from price changes or margins, can measure it at fair value less costs to sell, with changes in profit or loss. Major cryptocurrencies are generally fungible and traded, so they can qualify as commodities. See IAS 2 inventories.

What about stablecoins and crypto received as payment?

A stablecoin that gives the holder an enforceable right to redeem it for cash from the issuer may be a financial asset under IFRS 9, measured accordingly, while one without such a right is treated like other crypto. Crypto received from customers for goods or services is non-cash consideration, measured at fair value, and then held under the policies above. Rewards from staking and other protocol activities have no specific guidance, and companies develop and disclose a policy. See stablecoins, safeguarding customers' crypto and crypto mining revenue; tokens granted to staff are covered in share-based payment in fintech. See non-cash consideration.

How do taxes and disclosures interact?

In the US, the IRS treats crypto as property, so gains and losses are generally taxed only when it is sold or exchanged. Where accounts measure crypto at fair value or recognise impairments, the difference between the carrying amount and the tax base is a temporary difference for deferred tax. Disclosures should explain the policy chosen, holdings by type, fair value information where relevant and the judgements made. The topic returned to the agenda of the IASB's Accounting Standards Advisory Forum in October 2026, but no new IFRS requirements have been proposed, so the 2019 decision still applies. See deferred tax.

How does US GAAP differ?

ASU 2023-08, effective for fiscal years beginning after 15 December 2024, requires crypto assets within its scope, those that are fungible, held on a blockchain, secured by cryptography, not issued by the holder and not giving rights to underlying goods or services, to be measured at fair value with changes in net income, and presented separately from other intangible assets. Before then, US GAAP used a cost-less-impairment model without reversals. Crypto outside its scope, such as many stablecoins, follows other guidance. See IFRS and US GAAP impairment compared. See ASU 2023-08 explained.

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