ASU 2023-08 is the FASB accounting standard that requires companies reporting under US GAAP to measure in-scope digital assets, including Bitcoin, at fair value, with changes in value recognised in net income each period. It replaced the old impairment-only model, under which Bitcoin could be written down but never written back up. For most finance teams, it makes Bitcoin accounting simpler, more transparent and closer to economic reality.
This article explains what the standard says, when it applies, and what it means for a company holding Bitcoin on its balance sheet.
What ASU 2023-08 changes
The FASB standard on digital assets (ASU 2023-08) was issued in December 2023. Before it, US GAAP had no specific guidance for Bitcoin. In practice, companies treated it as an indefinite-lived intangible asset. That meant:
- Bitcoin was recorded at cost.
- If its price fell below carrying value at any point, the company recorded an impairment loss.
- If the price later recovered, no write-up was allowed until the asset was sold.
The result was a balance sheet that showed the lowest value the asset had touched, not what it was worth. We cover this history in more detail in Bitcoin accounting: impairment vs fair value.
ASU 2023-08 replaces that model. In-scope holdings are now measured at fair value at each reporting date. Gains and losses flow through net income, in the period they arise.
Which assets are in scope
The standard applies to assets that meet all of the following criteria:
- They meet the definition of an intangible asset under US GAAP.
- They do not give the holder enforceable rights to, or claims on, underlying goods, services or other assets.
- They are created or reside on a distributed ledger based on blockchain or similar technology.
- They are secured by digital signatures and related mathematical techniques.
- They are fungible.
- They are not created or issued by the reporting entity or its related parties.
Bitcoin meets these criteria. Many other digital assets do too, but some do not. Stablecoins that give a right to redeem for dollars, for example, generally fall outside scope. Each asset should be assessed on its own terms.
Effective date and transition
The key dates are straightforward.
| Item | Requirement |
|---|---|
| Effective date | Fiscal years beginning after 15 December 2024, including interim periods within those years |
| Early adoption | Permitted |
| Transition method | Cumulative-effect adjustment to opening retained earnings at the start of the year of adoption |
| Entities covered | All entities reporting under US GAAP, public and private |
The transition adjustment matters. A company that impaired its Bitcoin under the old model will, on adoption, remeasure those holdings to fair value. The difference between carrying value and fair value goes directly to opening retained earnings. It does not pass through that year's income statement.
CFO tip: before adoption, reconcile your lot-level records to the general ledger and agree your pricing source with your auditor. The transition adjustment is only as reliable as the cost and carrying data behind it.
How fair value is measured
Fair value under US GAAP follows ASC 820. It is the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date.
For Bitcoin, this usually means:
- Identifying the principal market. This is the market with the greatest volume and level of activity that the company can access.
- Choosing a consistent cut-off time. Bitcoin trades around the clock, so the policy should specify the exact time used for period-end pricing.
- Using observable prices. Bitcoin generally has quoted prices in active markets, which places it at Level 1 of the fair value hierarchy.
Costs to sell are not deducted from fair value. The treatment of acquisition costs, such as trading commissions, should be agreed with your auditor and applied consistently.
Presentation and disclosure requirements
ASU 2023-08 adds specific presentation rules:
- In-scope digital assets are presented separately from other intangible assets on the balance sheet.
- Remeasurement gains and losses are presented separately from changes in other intangible assets in the income statement.
The disclosure requirements are more detailed. They include:
- For each significant holding: the name, cost basis, fair value and number of units held.
- The aggregate fair value and cost basis of holdings that are not individually significant.
- Any contractual sale restrictions, and the circumstances that could cause them to lapse.
- An annual roll-forward showing additions, dispositions, gains and losses.
- For dispositions, the difference between sale proceeds and cost basis, and the cost basis method used.
These disclosures make record-keeping central. A company needs lot-level data showing when each unit was acquired, at what price, and when and how it was disposed of. We set out the methods in cost basis methods for corporate Bitcoin holdings.
What it means for the income statement
Fair value accounting makes reported earnings more volatile. A large Bitcoin holding will move net income every quarter, in both directions.
This is a presentation effect, not a change in the underlying economics. But boards, investors and lenders will see it. Practical steps include:
- Explaining Bitcoin-related gains and losses separately in management commentary.
- Considering whether to present an adjusted measure that excludes remeasurement, clearly reconciled to GAAP figures.
- Checking whether any loan covenants or incentive plans reference net income, and whether they need to be revisited.
For guidance on how to frame this for shareholders, see communicating a Bitcoin strategy to investors.
Tax and other knock-on effects
Accounting and tax are separate. In many jurisdictions, tax is charged on realised gains, not on fair value changes. Where the two diverge, a temporary difference arises, and the company may need to recognise deferred tax. The principles are covered in how Bitcoin is taxed for companies.
Every company's position is different. Companies should take their own accounting, tax and legal advice before adopting the standard or changing their reporting.
How The Bitcoin World helps
We help finance teams design the process around their Bitcoin holdings, including record-keeping, pricing policy and board materials that explain the accounting clearly. We work alongside your auditors and advisers rather than replacing them. Execution and custody are carried out by licensed third-party institutions. See our corporate treasury and board advisory services, or the glossary for key terms.