Accounting for Crypto Assets: Key Concerns and Practical Guidance

The cryptocurrency market is booming, but a lack of accounting standards poses legal and financial risk. Jennifer Hull discusses what stakeholders need to know.

Today’s cryptocurrency market has a total capitalization exceeding $2 trillion. Major retailers like Starbucks, AT&T, and Overstock.com accept cryptocurrencies as payment. Other corporations, like Tesla and MicroStrategy, report holdings in the billions of dollars. Yet as of this writing, there are no binding accounting requirements for these digital assets.

Investors, companies, accountants, and lawmakers alike have called for them, understanding the legal and economic risk posed by not having standards—whether that involves regulatory scrutiny, audit complications, or questions from investors and analysts. Even so, no relevant US generally accepted accounting principles standards are in development; the Financial Accounting Standards Board only recently put cryptocurrencies on its research agenda; and the International Accounting Standards Board has provided limited guidance.

For now, most companies classify their crypto holdings as indefinite-lived intangible assets, following nonauthoritative guidance form the American Institute of Certified Public Accountants. But as the following case study demonstrates, questions and concerns arise from this current guidance. Here’s what relevant stakeholders need to know.