FASB Issues Exposure Draft of Proposed Accounting Standards Update on Crypto Assets; Comments Due June 6

The Financial Accounting Standards Board (FASB) issued an Exposure Draft of a proposed Accounting Standards Update (ASU), titled "Accounting for and Disclosure of Crypto Assets". 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. The feedback was that the accounting for crypto assets as indefinite-lived intangible assets does not provide investors with decision-useful information or reflect the underlying economics of those assets.

The proposed ASU would improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The proposed amendments also would improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, restrictions, and changes in those holdings.

The amendments in this proposed ASU 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
• Are fungible, and
  
• Are not created or issued by the reporting entity or its related parties.
  

Comments are due June 6, 2023.

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