The FASB has agreed to take on a new project focused on how companies account for cryptocurrency asset transfers.

FASB Chairman Richard Jones said that guidance does need to be clear, but he also wants to avoid being too prescriptive. “I do want to be careful, though, because there’s an infinite number of transactions that can occur in this space,” he said, pointing out the need to steer clear of guidance that attempts to address every emerging business model.

According to Accounting Today, the decision, announced at a board meeting this week, builds on the board's 2023 standard for crypto assets and reflects a growing need for clarity as digital asset activity becomes more complex.

The project will expand the scope of the existing guidance to include wrapped tokens and receipt tokens, which have become increasingly prevalent since the 2023 update. It also will clarify whether control of a crypto asset has actually passed in transactions such as lending, wrapping, staking, or participating in liquidity pools.

Stakeholders have informed FASB that such transactions often appear to result in a transfer of an asset, but the transferor may continue to have contractual rights to take the asset back, leading to uncertainty about derecognition.

Input received during FASB's broader agenda consultation demonstrated that stakeholders are concerned that the limited scope of Subtopic 350-60 has created a "two-class system." Preparers indicated that this leads to different treatments for assets that have similar economic characteristics, which can introduce artificial gains and inconsistent results.

They asked the board to broaden the scope to provide accounting that better reflects the economics of crypto activity and reduces costs and complexities associated with multiple models.

The IASB is also considering similar work, indicating that crypto-asset accounting will continue as a common priority for standard setters.