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FASB Proposes Accounting Standard for Crypto Assets

S.J. Steinhardt
Published Date:
Mar 24, 2023

iStock-826741128 Accounting Standards

The Financial Accounting Standards Board (FASB) has proposed a standards update on the accounting for, and disclosing information on, crypto assets.

This is the first time that the FASB has formally proposed such a standard, Accounting Today reported. In its proposal, the board said that stakeholder feedback “indicated that improving the accounting for and disclosure of crypto assets should be a top priority for the Board. Stakeholders stated that the current accounting—except as provided in generally accepted accounting principles (GAAP) for certain specialized industries—for holdings of crypto assets as indefinite-lived intangible assets, which is a cost-less-impairment accounting model, does not provide investors, lenders, creditors, and other allocators of capital ... with decision-useful information.”

The proposed standard would apply to crypto assets that:

● Meet the definition of intangible asset as defined in the FASB Accounting Standards Codification Master Glossary;
● Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services or other assets;
● Are created or reside on a distributed ledger based on blockchain technology;
● Are secured through cryptography;
● Are fungible; and
● Are not created or issued by the reporting entity or its related parties.

The proposal differs from GAAP by requiring that an entity measure certain crypto assets at fair value and would also require that an entity provide enhanced disclosures for both annual and interim reporting periods.

Fair value measurement “would align the accounting required for all holders of crypto assets with the accounting for entities that are subject to certain industry-specific guidance (such as investment companies) and eliminate the requirement to separately test those assets for impairment, thereby reducing the associated cost and complexity of applying the current guidance,” the proposal states.

"During the FASB's recent agenda consultation process, stakeholders from all professional backgrounds identified digital assets as a top priority area for the Board to address," FASB Chair Richard Jones said in a statement, the FASB press release reported. "We responded to that feedback with the proposed ASU, which would provide investors greater transparency into the fair value of crypto assets held by entities, as well as additional disclosures about the types of crypto assets held and changes in those holdings."

The public comment period is open until June 6, 2023.