The new FASB crypto fair value accounting rules - 2024

The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S..

Since December 14th, 2023, FASB has integrated new rules in crypto accounting. In those new rules, we mainly need to take care of 2 things:

• The scope of this new rule
• Fair value calculation

Scope of the crypto assets concerned:

• intangible asset: This means the asset lacks physical substance and is expected to generate economic benefits for the company over time (utility tokens are included in this definition)
• Exclude tokens with contracts/rights inside: For example, tokens representing equity or treasury bonds generating yield are excluded.
• Decentralized and transparent (built on blockchain technology)
• Secured
• Fungible (exclude NFT because it needs to be interchangeable)
• Not created by the company itself

Fair value calculation

What does fair value mean?

It means that companies choose their preferred schedule (daily, weekly, etc.) for automated evaluations based on real-time market data from your principal market. There is no need to consider the historical values of those crypto assets for calculation; just adding the current one, and include variations in net income.

Before the new rules, those assets were measured at historical cost less impairment (the recognition of impairment was hard to calculate)

Consequences

Now, those assets have to be calculated at the fair value, with changes in fair value included in net income for each reporting period:

• In the balance sheet: Present separately the aggregate amount of crypto assets measured at fair value and other intangible assets that are not measured at fair value
• In net income: include changes in the fair value of crypto assets separately from changes in the carrying amount (e.g., impairments and amortization) of other intangible assets, including other digital assets that are not measured at fair value