Bloomberg Law
March 23, 2023, 2:03 PMUpdated: March 23, 2023, 4:41 PM

US Crypto Accounting Plan Aims to Capture Bitcoin Volatility (1)

Nicola M. White
Nicola M. White

Companies that go all in on cryptocurrency—or even just dabble in it—would get long-awaited accounting rules under a proposal floated Thursday by US accounting standard-setters.

The plan calls on companies that hold cryptocurrencies to report them at fair value, a measurement aimed at capturing the most up-to-date value of assets like Bitcoin and Ether. Changes in value would get reported in a company’s net income, opening up earnings to swings depending on how much crypto the business holds. The Financial Accounting Standards Board proposal eliminates current practice, which effectively only lets companies record decreases in the value of their crypto holdings, never gains if the price rebounds.

“It will make things so much easier,” said Mark Eckerle, senior manager at WithumSmith+Brown PC, who is the firm’s digital asset team leader. “It will be a better indicator of a company’s performance and where they actually stand with their assets on the balance sheet at fair value.”

FASB’s proposal is narrow—on purpose. Tokens a company creates for use within its own platform, such as the self-created tokens collapsed crypto exchange FTX offered to customers to make discounted trades on the FTX platform, are specifically excluded. That’s to ensure that companies don’t mint tokens just to inflate their balance sheets.

Under FASB’s plan, assets that are created or reside on distributed ledgers based on blockchain technology and are secured through cryptography would be covered by the potential new rules. They would have to meet the definition of an intangible asset, as defined in the US accounting rules.

They also have to be fungible, meaning they can be interchanged with other assets of the same type. Non-fungible tokens, or NFTs—unique digital tokens that range from video clips to sports memorabilia—are excluded from the proposal. Stablecoins are not expected to meet the criteria to apply the proposed accounting, nor are wrapped tokens, which are digital tokens that allow crypto from one blockchain to be used on another.

“They had to start somewhere,” said Amal Shehata, accounting professor at New York University’s Stern School of Business. “This seemed to be the most pervasive and the furthest along on their own journey and evolution, as opposed to NFTs and stablecoins; they’re still a bit more nascent.”

Lack of rules

No part of the rulebook for US accounting specifically spells out how companies like enterprise software maker MicroStrategy Inc., automaker Tesla Inc., or crypto exchange Coinbase Global Inc. need to recognize and measure the digital currencies they stash in company coffers.

Companies default to an American Institute of CPAs practice guide that treats most cryptocurrency as intangible assets, a category that includes things like trademarks, copyrights, and brands—items that, unlike crypto, are rarely traded. The upshot: Companies have been recording crypto holdings at the historical price they paid and assess their stake every quarter for impairments, or drops in value. If the crypto they bought is Bitcoin, and the Bitcoin price drops even briefly during the period, it’s considered impaired. Companies have not been allowed to revise values upward if the market recovers.

“The balance sheet is not 100% accurate based on where you’re actually at in the market now,” said Jeff Rundlet, head of accounting strategy at accounting software company Cryptio. “And companies are spending a lot of money and time on impairment.”

Two crypto mining companies—Marathon Digital Inc. and Riot Platforms Inc.—recently announced accounting restatements after miscalculating their Bitcoin impairments. The companies erred in the method they used to determine whether the value had dropped, they reported.

FASB since 2017 has rejected three calls to write official rules for crypto, reasoning that few companies had significant holdings of crypto and of those that did, many accepted digital currency as customer payments but immediately converted it to cash. The conversation changed once major companies like Tesla and MicroStrategy started investing in Bitcoin.


Companies are already required to present intangible assets as a line item in their balance sheets. Under FASB’s proposal, companies would have to make a separate entry for their crypto assets so investors and other readers of financial statements get a clear picture of how much a company is invested in crypto.

Because crypto holdings would be measured at fair value, companies would have to supply all the disclosure requirements outlined in FASB’s fair value measurement standard, ASC 820, about how they measure their holdings.

The proposal calls for additional disclosures about significant holdings of crypto, any restrictions on the holdings, and any changes in the holdings.

Requirements would apply to both public and private companies, FASB said.

Comments are due June 6.

(Updated with additional details throughout.)

To contact the reporter on this story: Nicola M. White in Washington at

To contact the editors responsible for this story: Jeff Harrington at; Kathy Larsen at

Learn more about Bloomberg Law or Log In to keep reading:

Learn About Bloomberg Law

AI-powered legal analytics, workflow tools and premium legal & business news.

Already a subscriber?

Log in to keep reading or access research tools.