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News

FASAB: Seized and Forfeited Digital Assets Don’t Count as Money

By:
S.J. Steinhardt
Published Date:
Jun 24, 2024

Seized and forfeited digital assets do not, in most cases, count as real money for the purposes of federal government accounting, a technical bulletin released by the Federal Accounting Standards Advisory Board (FASAB) announced.

"Digital assets are not considered fiat money because they are not issued by a government entity nor are their values backed by the stability and credit worthiness of a government entity," the bulletin states. "Additionally, digital assets, other than central bank digital currencies, do not typically possess all monetary characteristics. That is, they are not effective as a unit of account, medium of exchange, or store of value."

FASAB had originally planned to address digital asset reporting as part of its software technology project, but seized and forfeited digital assets (for example, those taken as part of criminal proceedings) have become more significant over the years, Accounting Today reported. FASAB, in response to several requests from reporting entities and auditors, the board decided to issue a new technical bulletin on applying the existing seized and forfeited property reporting requirements in Statement of Federal Financial Accounting Standards 3: Accounting for Inventory and Related Property (SFFAS 3) to new and unique characteristics of digital assets.

Overall, the board said, the federal government should not count these assets as money. The exception is central bank digital currencies, which are "a form of digital money denominated in the national unit of account that is a direct liability of the central bank," the bulletin states. In this respect, "central bank digital currencies are typically considered official digital forms of government-backed money that essentially serve the same purposes as physical cash."