By accessing the FASB documents on this site, you accept and agree to these FASB terms and the website terms as applied to your use of this site or any FASB licensed documents.
The creation and evolution of blockchain technology over the past decade has accelerated exponentially. Blockchain offers a new secure way to process and store financial and nonfinancial information that is easily accessible to users.
A blockchain is made up of a series of “blocks,” each of which contains data for multiple transactions, a hash (similar to a unique record number), and the hash of the previous block. Each block is validated by a decentralized network of participants (that is, a peer-to-peer network without a central authority) and is linked to another block using cryptography (that is, code). The decentralization of the validation process and the use of cryptography make it nearly impossible, or at least cost prohibitive, to tamper with information in the block.
Blockchain is the foundation for all forms of crypto assets including cryptocurrencies (for example, bitcoin and ether) and tokens (for example, utility, nonfungible, and security tokens).
However, with new and evolving technology comes new and unique risks and challenges that may affect processes and related controls (for example, safeguarding of assets through key encryption and splitting or multi-signature wallets) and financial reporting (for example, fair value measurement).
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60), which provides guidance on the accounting for and disclosure of certain crypto assets. More specifically, all public and private entities holding crypto assets that meet certain criteria outlined in the ASU must measure those crypto assets at fair value, with changes recognized in net income every reporting period.1 Additionally, ASU 2023-08 requires enhanced disclosures about those crypto assets in annual and interim reports. The ASU is effective for fiscal years beginning after December 15, 2024; therefore, it became effective on January 1, 2025 for all entities with calendar year ends. A cumulative-effect adjustment to reflect the impact of adoption should be recognized to the opening balance of retained earnings as of the beginning of the fiscal year of adoption.
This publication discusses accounting and internal controls over financial reporting related to the purchase, sale, and receipt of cryptocurrencies that meet the definition of a crypto asset in Accounting Standards Codification (ASC) 350-60, Intangibles — Goodwill and Other — Crypto Assets. It does not cover specialized industry guidance in ASC 940, Financial Services — Brokers and Dealers, and in ASC 946, Financial Services — Investment Companies.
1 Entities must continue to apply other U.S. GAAP to account for crypto assets that are not in the scope of the ASU. Typically, crypto assets outside the scope of ASC 350-60 will be accounted for as intangible assets under ASC 350-30, Intangibles — Goodwill and Other, General Intangibles Other Than Goodwill.