Bitcoin Accounting Under US GAAP: ASC 350-60 and Fair Value

For a decade, a US company that bought Bitcoin wrote it down when the price fell and could not write it back up when the price recovered. Bitcoin accounting under US GAAP changed with ASC 350-60, Crypto Assets, a Subtopic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) added by Accounting Standards Update (ASU) 2023-08.

Inside its scope, native Bitcoin, the unit markets quote as BTC, is remeasured to fair value each reporting date, every change hitting net income. The headline of Bitcoin accounting under US GAAP is narrower than it sounds: ASC 350-60 supplies subsequent measurement, presentation and disclosure, and says in terms that it supplies nothing else. The working model is a sandwich:

Transaction-specific accounting first -> ASC 350-60 subsequent accounting while the BTC is in scope -> transaction-specific derecognition when it leaves.

Reading rule, and the jurisdiction. Everything below is US GAAP for an entity reporting under the FASB Codification. Codification requirements carry a paragraph reference; Securities and Exchange Commission (SEC) staff positions, meaning Staff Accounting Bulletins and comment letters, are staff views reaching entities that file with the Commission; major-firm publications are interpretation. Only the first is generally accepted accounting principles (GAAP), and the three are not interchangeable.

Bitcoin accounting under US GAAP: scope, effective date and the transition entry

ASC 350-60 is effective for fiscal years beginning after 15 December 2024, including interim periods within those fiscal years; early adoption was permitted for statements not yet issued, and an entity adopting in an interim period had to do so as of the beginning of that fiscal year (ASC 350-60-65-1(a)). A quarterly reporter therefore remeasures at every interim balance-sheet date. That qualifier is the one most often dropped.

Transition was a cumulative-effect adjustment, not a restatement. ASC 350-60-65-1(b) and (c) require the difference between the carrying amount of crypto assets at the end of the prior annual period and their fair value at the start of the adoption year to go to the opening balance of retained earnings (or another appropriate component of equity or net assets). Comparatives keep their old impairment-only figures.

The Subtopic applies to all entities holding crypto assets (ASC 350-60-15-2). One that also follows industry-specific guidance is in scope rather than exempt: the Board brought investment companies in for the disclosures, and decided they should keep presenting crypto amounts under Topic 946 (ASU 2023-08, BC27).

An asset is in scope only if it meets every one of the six criteria in ASC 350-60-15-1, which applies "to holdings of assets that meet all of the following criteria." The asset must:

• meet the definition of an intangible asset;
• not provide the holder with enforceable rights to or claims on underlying goods, services or other assets;
• be created or reside on a distributed ledger based on blockchain or similar technology;
• be secured through cryptography;
• be fungible; and
• not be created or issued by the reporting entity or its related parties.

Native Bitcoin fits cleanly: no issuer promises redemption, the holder has no contractual claim on a reserve asset, a service or another token, and BTC is fungible and cryptographically secured on its own network. The second criterion does the real work: a token conveying an enforceable right to a good, a service or another asset fails it and falls outside the Subtopic. Stablecoins, wrapped tokens (representing, and redeemable for, a coin held elsewhere), receipt tokens evidencing a deposit, tokenised real-world assets and issuer-created tokens are each tested against all six criteria on their own facts, never by analogy to BTC.

Failing one leaves the asset where it was: a crypto intangible outside ASC 350-60 stays under ASC 350-30, which for an indefinite-lived intangible is the legacy impairment-only model. The write-down is not reversed when the price recovers, a rule reaching the Codification from FASB Statement No. 142, paragraph 17: "Subsequent reversal of a previously recognized impairment loss is prohibited."

Initial recognition is still transaction-specific

The Subtopic's most consequential sentence is easy to overlook. ASC 350-60-05-2 states that it "does not address the initial measurement, recognition, and derecognition of crypto assets," which are accounted for "in accordance with other generally accepted accounting principles" (ASU 2023-08). Hence there is no ASC 350-60-40 derecognition section.

A cash purchase, a customer payment, a mining reward, an owner contribution, an exchange of another nonfinancial asset and borrowed BTC all produce a positive BTC balance, and none starts with the same journal entry.

A cash purchase begins under the guidance for an acquired intangible asset: ASC 350-30-15-4(e), as amended by ASU 2023-08, excludes in-scope crypto from Subtopic 350-30 "except for recognition and initial measurement." BTC received from a customer is noncash consideration under Topic 606, Revenue from Contracts with Customers, where that Topic's scope criteria are met, and ASC 606-10-32-21 measures it at contract inception. A mining-pool arrangement needs a customer and performance-obligation analysis; a protocol reward with no customer falls to the ASC 105 hierarchy, under which ASC 105-10-05-2 requires an entity to "first consider accounting principles for similar transactions or events within a source of authoritative GAAP" before nonauthoritative sources (ASU 2009-01, which inserted Topic 105 and reproduces the paragraph). Borrowed BTC introduces both an asset and a return obligation.

Only then does the holding enter the subsequent-measurement model, an order that prevents using the eventual classification of Bitcoin to invent the original credit.

Subsequent measurement: fair value through net income

For in-scope BTC, ASC 350-60-35-1 requires fair value in the statement of financial position, and "gains and losses from the remeasurement of crypto assets shall be included in net income" (net income, not other comprehensive income). Fair value is measured under ASC 820; ASU 2023-08 supplies no crypto-specific alternative where there is no quoted price in an active market.

Suppose an entity acquires 1 BTC for $70,000 and its reporting-date fair value is $92,000. Ignoring transaction costs, the $22,000 increase is recognised through earnings rather than held until sale; if fair value later falls to $80,000, the $12,000 decrease also goes through net income.

Fair value still requires an ASC 820 policy

"Use fair value" does not mean "pick a crypto website." The measurement is the price in the principal market even where another is more advantageous (ASC 820-10-35-6), and the entity must have access to that market at the measurement date (ASC 820-10-35-6A). For a liquid holding, an unadjusted quoted price in an active market for identical BTC the entity can access is a Level 1 input, and such a quote "shall be used without adjustment to measure fair value whenever available" (ASC 820-10-35-40 and 35-41). Management may not pick whichever exchange produces the most favourable year-end price: the price policy (venue, product, timestamp, price field, missing-data treatment and fallback) must be fixed before the number is known.

Transaction costs sit outside that measurement: the price used "shall not be adjusted for transaction costs," because such costs "are not a characteristic of an asset or a liability; rather, they are specific to a transaction" (ASC 820-10-35-9B). ASU 2023-08 went no further: the Board "decided not to provide guidance on how to recognize or present transaction costs to acquire crypto assets," leaving industry-specific capitalisation requirements untouched (BC36). That gap bites where a crypto system reports one "net execution" figure combining price, commission and network fee.

Presentation and disclosure

In-scope crypto assets are presented separately from other intangible assets in the statement of financial position, more disaggregated presentation being permitted, and their remeasurement gains and losses separately from changes in other intangible carrying amounts (ASC 350-60-45-1 and 45-2). The subledger must therefore keep a cost basis that no longer appears on the balance sheet at all.

Disclosure timing is specific rather than annual-only, and ASU 2023-08 amended the interim-reporting Topic to point at it (ASC 270-10-50-7(p)). At interim and annual dates an entity discloses, for each holding significant as determined by its fair value, the name, cost basis, fair value and units held, plus aggregated cost bases and fair values for holdings that are not individually significant (ASC 350-60-50-1). For crypto assets under contractual sale restrictions at the balance-sheet date it discloses their fair value, the nature and remaining duration of the restrictions and what could cause them to lapse (ASC 350-60-50-6), judging aggregation where several are involved (ASC 350-60-50-7).

Annual dates add the cost-basis method used to compute gains and losses (first-in first-out, specific identification, average cost or another) and, if not presented separately, the income-statement line where they are reported (ASC 350-60-50-2); a reconciliation of activity from opening to closing crypto-asset balances showing additions, dispositions, gains and losses (ASC 350-60-50-3); and a description of the activities producing those additions and dispositions, with total cumulative realised gains and losses from dispositions during the period (ASC 350-60-50-4).

Read ASC 350-60-50-3 precisely; it is widely misdescribed. The reconciliation is in the aggregate: one rollforward covering the crypto assets, not one per coin. Only its gains and losses lines are determined crypto-asset-by-crypto-asset: each holding with a net remeasurement gain goes to the gains line and each holding with a net loss to the losses line, so the two are not netted. A single net remeasurement figure does not comply.

One narrow relief: under ASC 350-60-50-5 an entity receiving crypto as noncash consideration in the ordinary course of business and converting it nearly immediately into cash "need not include that activity" in the ASC 350-60-50-3 and 50-4 disclosures. Those two only: 50-1, 50-2 and 50-6 still apply.

Realised gain is not the current-period fair-value adjustment

Suppose BTC was acquired for $60,000, remeasured to $90,000, then sold for $95,000: the carrying amount before sale already reflects most of the appreciation. A realised gain under ASC 350-60-50-4(b) is struck against the asset's original cost basis, so it will not equal the rollforward's remeasurement gains, and both must be produced. An ASC 350-60 system therefore preserves cost basis after fair value becomes the carrying amount, the point that catches out ledgers configured to overwrite cost at each remeasurement.

Derecognition is outside ASC 350-60

Because ASC 350-60-05-2 excludes derecognition, a disposal routes through ASC 350-10-40-1, which sends the derecognition of a nonfinancial asset to Subtopic 610-20, or to Topic 606 where the disposal is a contract with a customer. The gain or loss is consideration less carrying amount.

There is a trap in that routing. Where BTC is transferred under a contract not meeting all the criteria in ASC 606-10-25-1 (collectibility, for instance), ASC 350-10-40-3, as amended by ASU 2023-08, says the entity "shall not derecognize the nonfinancial asset"; subparagraph (d) adds that a crypto asset under Subtopic 350-60 keeps recognising "gains and losses from remeasurement" until those criteria are met. The BTC may have left the wallet while the asset stays on the balance sheet, still fair-valued.

Current major-firm interpretation remeasures departing units to fair value at the transaction date before derecognising them, so that where consideration equals ASC 820 fair value little or no disposal gain remains. Label that correctly: no sentence in ASC 350-60 requires a remeasurement immediately before every sale.

Nor is the result always zero. The basis for conclusions observes at BC49 that because crypto assets "are remeasured at fair value up to the date of sale, the gain or loss recognized as a result of sale may be zero" (may, not will). It will not be zero where consideration differs from ASC 820 fair value, as on a sale outside the principal market or at an agreed price that is not fair value; a genuine ASC 610-20 gain or loss then remains.

A self-transfer is not a disposal

Bitcoin tracks value as unspent transaction outputs (UTXOs), discrete chunks of BTC locked to a spending condition, each of which a spending transaction must consume whole and replace with new outputs. That mechanic makes an internal wallet movement look like a disposal.

Consolidating two UTXOs into a cold-storage output (its key held offline) plus a change output destroys the old outputs and creates new ones, yet all of the Bitcoin except the network fee stays under the same entity's control: preserve the existing lots and derecognise only the fee. A wallet transaction does not establish derecognition by itself, and the same logic governs custodial transfers and collateral.

Bitcoin accounting under US GAAP leaves mining judgment-heavy

US GAAP has no comprehensive model for crypto mining; the analysis divides on whether an identifiable customer exists. Bitcoin accounting under US GAAP therefore reaches mining through other Topics, as the initial-recognition section above sets out.

Pool participant. Where a pool operator is an identifiable customer and the participant supplies computational power as a service, ASC 606 can apply. Current nonauthoritative KPMG interpretation recognises revenue as computational power is provided, often within the same day; the payout method drives variable consideration, since pay-per-share (PPS) and full-pay-per-share (FPPS) amounts may be estimable before a block succeeds while success-based amounts may stay constrained until it does.

Timing and measurement are separate: US GAAP fixes the measurement date, IFRS does not. In a 2 February 2024 comment letter the SEC staff told a listed miner that, for third-party pools paying rewards only when the pool successfully mines a block, measuring noncash consideration "using the spot rate of bitcoin at the time that the block is successfully mined ... does not comply with the requirement in ASC 606-10-32-21 to measure noncash consideration at contract inception." Lifting a constraint does not reset the measurement date, a divergence from IFRS 15, which requires fair value for noncash consideration but prescribes no measurement date.

Solo miner. The protocol subsidy raises the same customer problem as under IFRS: a decentralised network is not readily an identifiable customer. In the same letter the staff directed the registrant to "revise the table so that 'Operator - block reward' revenue is not characterized as revenue from contracts with customers" (SEC staff comment). That is the boundary for one filer, not codified GAAP for every miner. Absent an authoritative Topic, ASC 105 requires a consistently applied policy using authoritative analogy before nonauthoritative literature. Current nonauthoritative KPMG interpretation has contract inception and satisfaction of the performance obligation coinciding at successful validation where Topic 606 is applied by analogy; confirmations evidence reorganisation risk and the 100-block coinbase maturity rule restricts spending, and neither is an optional recognition date.

Hardware and hosting. Mining rigs are application-specific integrated circuits (ASICs), chips built only for the network's repeated hashing. Current secondary interpretation treats them as property and equipment under ASC 360, depreciated over an entity-specific useful life rather than a tax period. ASC 360-10-35-21 requires testing "whenever events or changes in circumstances indicate that its carrying amount may not be recoverable," and ASC 360-10-35-49 adds that a temporarily idled asset "shall not be accounted for as if abandoned" (both carried forward unamended from FASB Statement No. 144, paragraphs 8 and 28), so curtailing machines does not by itself stop depreciation. Hosting and hashrate contracts must also be screened under ASC 842-10-15-3 for "the right to control the use of identified property, plant, or equipment ... in exchange for consideration" (ASU 2016-02); the label is not the conclusion.

Bitcoin lending and borrowing

US GAAP has no Codification section titled "Bitcoin loans," so authority matters more than assertion here.

Lender. A January 2023 KPMG summary of SEC staff views, nonauthoritative but currently useful, has the lender derecognise loaned BTC when the borrower can direct its use and bears loss or theft risk, recognise a crypto-asset loan receivable initially and subsequently at the fair value of the loaned units through earnings, and separately apply ASC 326, Financial Instruments: Credit Losses, to expected credit loss. The receivable is not native BTC merely because repayment is denominated in BTC.

Borrower. KPMG's April 2026 handbook recognises controlled borrowed BTC at fair value with a separate return obligation, treated under ASC 815, Derivatives and Hedging, as a hybrid instrument with a debt host and an embedded derivative indexed to BTC, requiring assessment of bifurcation and subsequent measurement. That is secondary interpretation, not explicit Bitcoin-loan guidance. Interest, collateral and repayment stay separate from principal, and assets and liabilities are not netted without meeting the offset criteria.

Custody after SAB 122

SEC Staff Accounting Bulletin 122, effective 30 January 2025, rescinded SAB 121 (Topic 5.FF) and with it the staff interpretation behind the safeguarding asset-and-liability presentation. An entity obliged to safeguard crypto-assets for others now decides whether to recognise a liability for the risk of loss, and measures it, under ASC 450-20 loss-contingency requirements in US GAAP or IAS 37 in IFRS Accounting Standards.

The transition is the part most summaries omit. Entities were to "effect the rescission of Topic 5.FF on a fully retrospective basis in annual periods beginning after December 15, 2024," with an election to effect it in any earlier interim or annual period in filings made after the SAB's effective date, and with "clear disclosure of the effects of a change in accounting principle upon initial application" (SAB 122, citing ASC 250-10-50-1 through 50-3). Contrast ASC 350-60's cumulative-effect adoption: a filer doing both in one year restated comparatives for one change only.

One dating point for a dual-reporting group. SAB 122 cross-refers to IAS 1; IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 for annual reporting periods beginning on or after 1 January 2027, early application permitted, applied retrospectively, so a calendar-year IFRS filer restates its FY2026 comparatives. That moves where safeguarding amounts sit under IFRS; it does not change the US GAAP recognition analysis.

Rescission proves nothing about recognition. It did not establish that a customer with a custodial BTC balance recognises native Bitcoin, nor that a custodian controls customer BTC. Each party still analyses its own contract, control, legal rights, contingencies and disclosures: a balance labelled "BTC" on an exchange screen is an accounting question, not an answer.

Statement of cash flows

BTC-only acquisitions, payments and remeasurements are noncash activity and stay off the face of the statement of cash flows, but not out of the notes. ASC 230 requires investing and financing activities that affect recognised assets or liabilities without cash receipts or payments in the period to be reported in related disclosures, a requirement carried into the Codification from FASB Statement No. 95, paragraph 32.

US GAAP adds one mandatory rule for a narrow fact pattern. ASC 230-10-45-27A applies when all its conditions are met (crypto accounted for under Subtopic 350-60, received as noncash consideration in the ordinary course of business, and converted nearly immediately into cash, which the paragraph defines as "a short period of time that is expected to be within hours or a few days, rather than weeks"), and the cash received then shall be classified as operating. It is not an election. A parallel rule at ASC 230-10-45-21A covers not-for-profit entities receiving donated crypto.

If any condition fails, the entity classifies the cash under the other ASC 230 guidance by the nature and purpose of the transaction. This is not a general rule that all Bitcoin sales are operating cash flow.

ASC 740: fair value can create tax temporary differences

A US GAAP holder recognises fair-value movements in earnings before tax law recognises a taxable gain or deductible loss, opening a gap between carrying amount and tax basis. ASC 740 applies the asset-and-liability approach: ASC 740-10-10-1 and 740-10-25-2 recognise deferred tax for the estimated future tax effects attributable to temporary differences and carryforwards, wording tracing to FASB Statement No. 109, paragraph 8(b).

One distinction matters, because IFRS and US GAAP can then recognise the same rate change in different periods: ASC 740-10-30-8 requires deferred tax to be measured using enacted tax law and rates only. Substantive enactment, which IAS 12 accepts, is not sufficient.

A deductible temporary difference also does not make the whole deferred tax asset usable. Under ASC 740-10-30-5(e) a valuation allowance reduces it to the amount more likely than not to be realised; uncertain tax positions are recognised under ASC 740-10-25-6 on a more-likely-than-not basis (the threshold introduced by FASB Interpretation No. 48, paragraph 6) and measured under ASC 740-10-30-7 at the largest amount greater than 50 per cent likely of being realised on settlement. The subledger therefore preserves tax basis separately from current fair value and original book cost: three quantities, three histories.

A current FASB project to watch

FASB added Accounting for Transfers of Crypto Assets to its technical agenda in November 2025: expanding ASC 350-60's scope for certain wrapped and receipt tokens, and clarifying derecognition for crypto transfer arrangements. On 15 April 2026 the Board tentatively decided to expand the scope for crypto assets giving a right to receive another in-scope crypto asset, treat those as separate crypto assets for disclosure, and add an illustrative tabular example. That changed on 19 August 2026. The Board completed deliberations on the derecognition strand and tentatively decided that "crypto asset lending transactions should not result in derecognition of the transferred crypto assets"; the lender instead reclassifies the asset on the balance sheet separately from unencumbered holdings and captions it as such, with fair value under ASC 350-60-35-1 reflecting the counterparty's credit risk, and no separate asset recognised for the right to receive the units back. Staff were directed to draft a proposed ASU for written ballot with a 60-day comment period (FASB project page). This is a tentative Board decision and not current GAAP, but it is the opposite of the derecognise-and-book-a-receivable model set out earlier in this article, so an entity running a lending programme should expect the model to change and should not treat today's treatment as settled.

A FASB project and a tentative Board decision are not current GAAP. Until an ASU is issued and effective, a wrapped or receipt token is tested against the six criteria in ASC 350-60-15-1 exactly as they stand.

More in this series

Accounting Token Anatomy: Bitcoin. This article stands alone, but the series builds in order.

Previous (01.1.7): Bitcoin Accounting Under IFRS: IAS 2, IAS 38, Impairment and Disclosure

Next (01.1.9): Bitcoin Journal Entries: A Complete Worked Accounting Example

Sources and further reading

• FASB ASU 2023-08, Accounting for and Disclosure of Crypto Assets (ASC 350-60)
• FASB ASU 2011-04, ASC 820 fair-value measurement
• FASB ASU 2016-12, ASC 606 noncash consideration
• FASB ASU 2016-02, Leases (Topic 842), Section A
• FASB ASU 2009-01, insertion of Topic 105 into the Codification
• FASB ASC 105, Generally Accepted Accounting Principles
• FASB ASC 350-10-40, derecognition gateway
• FASB ASC 360-10-35, impairment and disposal of long-lived assets
• FASB ASC 842-10-15, identifying a lease
• FASB ASC 740-10, Income Taxes and ASC 740-10-30, measurement
• FASB Statement No. 95, Statement of Cash Flows
• FASB Statement No. 109, Accounting for Income Taxes
• FASB Statement No. 142, Goodwill and Other Intangible Assets
• FASB Statement No. 144, Impairment or Disposal of Long-Lived Assets
• FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes
• FASB, Accounting for Transfers of Crypto Assets, project page
• SEC Staff Accounting Bulletin No. 122
• SEC staff comment to MARA, 2 February 2024
• KPMG US, Crypto Assets Handbook, April 2026
• KPMG US, Lenders' accounting for crypto intangible asset loans, January 2023
• IFRS 18, Presentation and Disclosure in Financial Statements

Educational research, not accounting, tax, legal, valuation or investment advice. The accounting conclusion depends on the entity's actual contracts, facts and applicable US GAAP.