Why Is the FASB Issuing This Accounting Standards Update (ASU)? 

On December 13, 2023, the FASB issued Accounting Standards Update (ASU) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets to improve the accounting for and disclosure of crypto assets.   This ASU was issued in response to stakeholder feedback that the current accounting for holdings of crypto assets as indefinite-lived intangible assets, which is a cost-less-impairment accounting model, does not provide decision-useful information that reflects (1) the underlying economics of those assets and (2) an entity’s financial position. Investors also requested additional disclosures about the types of crypto assets held by entities and the changes in those holdings. 

What Are the Main Provisions?

• Requires crypto assets to be measured at fair value with changes recognized in net income each reporting period. 
• Establishes the following disclosure requirements:

1. Present crypto assets measured at fair value separately from other intangible assets in the balance sheet;
2. Present changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement (or statement of activities for not-for-profit entities);
3. Specifically present cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business (or as a contribution, in the case of a not-for-profit entity) and are converted nearly immediately into cash; 
4. Disclose the name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of the crypto asset holdings that are not individually significant;
5. Disclose the fair value of crypto assets that are subject to contractual sale restrictions, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse;
6. Present a roll forward, in the aggregate, of activity in the reporting period for crypto asset holdings, including additions (with a description of the activities that resulted in the additions), dispositions, gains, and losses;
7. For any dispositions of crypto assets in the reporting period, disclose the difference between the disposal price and the cost basis and a description of the activities that resulted in the dispositions; 
8. If gains and losses are not presented separately, disclose the income statement line item in which those gains and losses are recognized; and 
9. Disclose the method for determining the cost basis of crypto assets.

Who Is Affected by the Amendments in This ASU?

The amendments in this ASU apply to all entities holding crypto assets as defined within the ASU.

When Will the Amendments Be Effective and What Are the Transition Requirements?

The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance).  If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. 

The amendments in this ASU require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.

Read full ASU here: ASU 2023-08