FASB Proposes Improvements to the Accounting for and Disclosure of Certain Crypto Assets

The FASB has issued a proposed Accounting Standards Update (ASU), Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The Board’s goal in issuing the proposal is to address the lack of guidance on crypto assets in U.S. GAAP. Specifically, stakeholders have raised concerns that the current intangible asset model used to measure crypto assets (1) does not faithfully represent the economics of such assets and (2) makes it needlessly complex to recognize impairments by requiring entities to use a crypto asset’s lowest observable fair value within a reporting period. The proposed amendments would address these concerns by requiring an entity to subsequently measure certain crypto assets at fair value. The proposal would apply to all entities that hold crypto assets when all of the following criteria are met:

• The crypto asset meets the U.S. GAAP definition of an intangible asset.
• The holder does not have “enforceable rights to, or claims on, underlying goods, services, or other assets.”
• The asset resides on a blockchain or other distributed ledger.
• The asset is secured by cryptography.
• The asset is fungible.

Comments on the proposed ASU are due by June 6, 2023. For more information, see the press release on the FASB’s Web site.