Corporations Grapple with Fair Value Accounting for Crypto Holdings
Major corporations are navigating significant changes in accounting and tax treatment for their cryptocurrency holdings. The Financial Accounting Standards Board (FASB) updated its standard, ASU 2023-08, to require fair value measurement of crypto assets each reporting period. This change replaced the old impairment-only model that only allowed write-downs but not write-ups.
The new standard applies to companies with intangible assets, such as Bitcoin and Ethereum, residing on a blockchain and using cryptographic security. FASB codified the update under ASC 350-60. Companies must now present crypto assets separately from other intangible assets on their balance sheets and report income statement changes on a distinct line item.
The Internal Revenue Service (IRS) classifies virtual currency as property, triggering taxable events for corporations with every sale, exchange, or token swap. Corporations report crypto-related capital gains and losses on Schedule D of Form 1120, the U.S. Corporation Income Tax Return. The IRS allows three acceptable cost basis methods: first-in-first-out (FIFO), last-in-first-out (LIFO), and specific identification.
The SEC rescinded Staff Accounting Bulletin 121 in January 2025 by issuing SAB 122, removing the punitive balance sheet treatment that previously discouraged banks from offering crypto custody services to clients. The new standard is expected to produce material earnings volatility for companies with large crypto positions through 2025 and into 2026.
According to a Deloitte survey, 99 percent of CFOs expect crypto to become part of their business operations. Strategy, formerly known as MicroStrategy, held approximately 847,666 BTC by late September 2026, with a fair value of $43.5 billion and a total cost basis of $35.6 billion as of March 2025.
Crypto represented roughly 1.5 percent of Block's overall company value at the time. Steve Gallucci, Global Leader of the Deloitte CFO Program, stated that crypto remains a unique asset class, and the accounting treatment for digital assets appears to be a work in progress.