FASB proposes standard on accounting and disclosure of crypto-assets

The Financial Accounting Standards Board (FASB) announced that the U.S. Securities and Exchange Commission (SEC) has accepted the 2023 GAAP Financial Reporting Taxonomy, the 2023 SEC Reporting Taxonomy, and the 2023 Data Quality Committee (DQC) Rules Taxonomy—collectively referred to as the “FASB Taxonomies.” FASB is also seeking comments, until June 06, 2023, on the proposed Accounting Standards Update that intends to improve the accounting for, and disclosure of, certain crypto assets.

The proposed standards would improve the accounting for certain crypto-assets by requiring an entity to measure those crypto-assets at fair value for each reporting period, with changes in fair value being recognized in net income. The proposed amendments would require that an entity provide enhanced disclosures for both annual and interim reporting periods, which would provide investors with relevant information to analyze and assess the exposure and risk of significant individual crypto-asset holdings. In addition, 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; this will help reduce the associated cost and complexity of applying the current guidance. The amendments in this proposed update would apply to all entities holding crypto-assets that meet all the following criteria:

• 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 and are fungible
• Are not created or issued by the reporting entity or its related parties

The amendments in this proposed update would require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the proposed amendments. On issuance of a final update, early adoption would be permitted in any interim or annual period for which an entity’s financial statements have not been issued (or made available for issuance) as of the beginning of the annual reporting period. FASB will determine the effective date after it considers stakeholder feedback on the proposed amendments.

Related links:

• Press release on proposed standard  
• Proposed standard on crypto-assets (PDF)
• Press release on SEC accepting FASB Taxonomies