Under current GAAP, in general, crypto assets are accounted for as indefinite-lived intangibles assets. These assets are initially recorded at cost and subject to impairment testing, and upward adjustment is prohibited. In other words, if the price of the cryptocurrency goes up or if a cryptocurrency that was previously written-down subsequently recovers, it cannot be written up.
FASB believes that the current accounting treatment of crypto assets does not provide investors, lenders, creditors and users of financial statements with decision-useful information (the underlying economics of these assets and an entity’s financial position). In order to address these concerns, the Board has issued the proposed Update to improve the accounting for and disclosure of certain crypto assets.
Under the proposed Update, when adopted, would require that an entity measure certain crypto assets at fair market value in the balance sheet and recognize changes in fair value in net income. The proposed Update also would require that an entity provide enhanced disclosures for both annual and interim reporting periods. The proposed Update would require a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period in which an entity adopts the proposed Update. The Board will determine the effective date after it considers stakeholders’ feedback on the proposed Update.
Link to FASB’s Exposure Draft Proposed Accounting Standards Update—Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Asset (fasb.org)