At the end of last year, the FASB launched its crypto assets project to consider changes to accounting standards for crypto assets. At its October 12, 2022 board meeting, the FASB reached a tentative decision to use fair value to measure certain crypto assets in financial reporting.
The Board decided to require an entity to:
- Measure crypto assets at fair value, using the guidance in Topic 820, Fair Value Measurement.
- Recognize increases and decreases in fair value in comprehensive income each reporting period.
- Recognize certain costs incurred to acquire crypto assets, such as commissions, as an expense (unless the entity follows specialized industry measurement guidance that requires otherwise).
In addition, the Board considered various measurement alternatives for crypto assets with inactive markets and decided not to pursue those alternatives; considered whether to provide implementation guidance relative to the application of fair value measurement of crypto assets and decided not to provide additional measurement guidance as part of its project; and considered whether there should be a difference for private companies for the measurement of crypto assets and decided that the measurement and recognition requirements should be the same for all entities.
The guidance would be limited to fungible tokens, deemed to be intangible assets, secured through cryptography on a blockchain or distributed ledger, and do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets.
Today, entities that hold crypto assets and do not follow specialized industry guidance in U.S.GAAP or certain regulatory guidance measure those assets at historical cost less impairment. In practice, crypto assets are impaired to the lowest observable fair value within a reporting period. Those impairment losses are presented in comprehensive income and cannot be reversed if there are subsequent increases in value.
The decisions are a key step for the FASB toward the development of a proposal that will be issued for public
The Board will consider presentation, disclosure, and transition at a future meeting.