PROJECT UPDATE

Accounting for and Disclosure of Crypto Assets (formerly known as Accounting for and Disclosure of Digital Assets)

Last updated on January 5, 2023. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Sections updated on the date above are indicated with an asterisk *)

 

Objective:


The objective of this project is to improve the accounting for and disclosure of certain crypto assets.

Background:


On December 15, 2021, in response to feedback received on the June 2021 Invitation to Comment, Agenda Prioritization, FASB Chair Rich Jones added a project to the FASB research agenda to explore accounting for and disclosure of a subset of exchange-traded digital assets and exchange-traded commodities.

The Board added a project to its technical agenda to improve the accounting for and disclosure of certain crypto assets.

Exposure Draft(s):

There are no exposure documents at this time.

There are no media releases or educational materials at this time.

Decisions Reached at Last Meeting (December 14, 2022):


December 14, 2022


The Board decided to require an entity to:

  1. At a minimum, present the aggregate amount of crypto assets (within the scope of this project) separately from other intangible assets that are measured using other measurement bases
  2. Present gains and losses on crypto assets (within the scope of this project) in net income and present those gains and losses separately from the income statement effects of other intangible assets, such as amortization or impairments (Vote 7-0)
  3. Classify crypto assets received as noncash consideration during the ordinary course of business that are converted nearly immediately into cash as operating cash flows.
The Board decided that these presentation requirements would be applicable to all entities, including public and private entities.

The Board also decided that investment companies and not-for-profit entities should present their financial statements in accordance with the presentation requirements in Topic 946, Financial Services—Investment Companies, and Topic 958, Not-for-Profit Entities, respectively, subject to minor amendments that would clarify the inclusion of crypto assets.

The Board affirmed that disclosures in Topic 820, Fair Value Measurement, would be required for crypto assets within the scope of this project. Those disclosures would be required in annual and interim periods, consistent with the existing requirements in Topic 820.

The Board also decided to require an entity to disclose the following:

  1. Signficant crypto asset holdings: At both annual and interim periods, the following information about each significant crypto asset holding (as determined by the fair value of that holding): the name of the crypto asset, fair value, units held, and cost basis. An entity should disclose the fair value and cost basis of other remaining crypto asset holdings, which may be aggregated into a single line item. At annual periods, an entity should disclose the basis on which the reporting entity determines its cost basis of crypto assets, unless changed during interim reporting periods.
  2. Rollforward of crypto asset: At annual periods, a reconciliation of activity between the beginning and end of the period for total crypto asset holdings. This disclosure would require that an entity disaggregate information by additions, dispositions, gains, and losses during the period and include a description of the additions and dispositions. For disposition of crypto assets during the period, entities must disclose the difference between the sale price and the cost basis of those assets.
  3. Restricted crypto asset: At both interim and annual periods, the fair value of the crypto assets that are restricted from sale, the nature and remaining duration of the restriction, and circumstances that could cause a lapse in the restriction(s).
The Board voted the significant crypto asset holdings and restricted crypto asset disclosures to be required at interim and annual periods.

The Board voted for the rollforward of crypto assets to be at annual periods only.

The disclosure requirements would be required for all entities, including entities that apply industry specific-guidance (to the extent that the requirements would not duplicate existing industry-specific disclosure requirements).

The Board considered and decided not to require the following disclosures:

  1. The portion of unrealized gains and losses for the period that relates to crypto assets still held at the reporting date
  2. The nature and purpose of crypto asset holdings
  3. The holder (for example, the entity, its agent, or another third party) of the cryptographic private key information and the associated crypto assets’ fair values
  4. The time of day, time zone, and date the pricing information was obtained to measure an entity’s crypto assets.

Tentative Board Decisions Reached to Date (as of December 14, 2022):


A summary of the Board’s tentative decisions reached to date can be found here.

The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

The following are links to the minutes for each meeting.  To view Board meetings and handouts from the past 90 days, click here.
 
December 14, 2022* Board Meeting—The Board discussed how entities that hold crypto assets within the scope of this project should present and disclose those assets.
October 12, 2022 Board Meeting—The Board discussed how entities that hold crypto assets within the scope of this project should measure those assets.
August 31, 2022 Board Meeting—The Board discussed the scope criteria and different entity types that would be within the scope of the proposed guidance.
May 11, 2022 Board Meeting—The Board added a project to its technical agenda to improve the accounting for and disclosure of certain digital assets. The Board decided not to add to its technical agenda a project that would address the accounting for exchange-traded commodities; however, the chair decided that this topic would remain a research agenda project.

The Board will consider scope refinements, transition, and whether the expected benefits of a proposed Accounting Standards Update would justify the expected costs at a future meeting.

Nicholas Cappiello
Supervising Project Manager
ntcappiello@fasb.org

Tiffany Wyszkowski
Project Manager
twyszkowski@fasb.org

Sally Bishop
Practice Fellow
sbishop@fasb.org

Gary Sardo
Practice Fellow
gsardo@fasb.org

Cassie Mongold
Post-Doctoral Fellow
cmongold@fasb.org

Lindsey Hoyer
Postgraduate Technical Assistant
lhoyer@fasb.org

Emma Little
Postgraduate Technical Assistant
elittle@fasb.org

The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
 

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