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NFTs and some stablecoins are excluded from FASB’s crypto accounting review

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(Kitco News) - The Financial Accounting Standards Board (FASB) has unveiled the criteria for its upcoming crypto accounting review, and there are some interesting exclusions to note, including nonfungible tokens and certain stablecoins. 

In what is yet another recent example of regulators starting to act on cryptos after years of dragging their feet, this decision by FASB marks a concrete step towards a proposal and final rule on the matter of how to report cryptocurrency holdings.

Businesses and investors have requested guidance from FASB for several years now on how to account for and disclose their Bitcoin and digital asset holdings, but the agency has declined to provide clarity.  

That changed in May when FASB added its “crypto accounting review” (referred to as ‘the project’) to the technical agenda and subsequently voted to consider setting clear rules on the accounting and disclosure of certain digital assets such as Bitcoin (BTC) and Ethereum (ETH). 

Fast forward to this past Wednesday – the Board has settled on the criteria that crypto assets “held by an entity must meet to be within the project’s scope.” 

Those criteria are as follows: 

  1. Meet the definition of intangible asset as defined in the Codification Master Glossary
  2. Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services, or other assets
  3. Are created or reside on a distributed ledger or “blockchain”
  4. Are secured through cryptography
  5. Are fungible.


An intangible asset is a non-financial asset that lacks physical substance, and that doesn’t carry contractual rights to cash flows or ownership of goods or services. 

As far as which entities would be included in the project, the Board indicated that “all entities would be within the scope of the project and that throughout the remaining deliberations, the Board will consider the applicability of its decisions to those entities.” It will also deliberate “potential measurement alternatives for crypto assets” at a future meeting. 

Based on these criteria, nonfungible tokens (NFTs) are excluded from review as they don’t satisfy criteria number five, while certain stablecoins that are backed by other assets or pegged to the U.S. dollar qualify as intangible assets and don’t meet the standards. 

Since NFTs and stablecoins are two of the most popular and active subsets of the cryptocurrency industry, their exclusion is likely to cause a headache for companies that own them in regards to how to properly report their holdings. 

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In response to criticisms about not including NFTs in the project, FASB board member Susan Cosper defended the decision, “It’s not pervasive or material at this juncture.” She did leave an opening for their review in the future; however, noting “It’s certainly something that we can focus on later if need be.”

Under the current guidelines, businesses are required to review the value of these assets at least once a year and report on declines in price if it drops below the purchase price. In instances where the value rises, companies can only record a gain when they sell the asset and not if they continue to hold it. 

Affected businesses have pushed back against these guidelines, instead asking for fair-value accounting rules to apply to crypto holdings, which FASB has said it would consider as part of the current project. 

It is the goal of FASB to conclude initial discussions on the crypto project by the end of the year, at which time the Board will vote on whether to issue a proposal. 

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