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In many cases, reporting entities acquiring crypto assets for investment purposes will follow the guidance of ASC 350, Intangibles – Goodwill and other, which requires acquired intangible assets to be recorded at cost.
Reporting entities that qualify as investment companies under ASC 946, Financial services – Investment companies should determine if the crypto assets they acquire represent debt securities, equity securities, or other investments. These investments should be initially measured at the purchase price, including transaction costs, and subsequently adjusted to fair value each reporting period. The remainder of this chapter focuses on accounting for crypto assets when an entity does not qualify as an investment company under ASC 946.
2.1.1 Receipt of crypto assets accounted for as intangibles
If a reporting entity purchases a crypto asset using cash, the value of the cash paid, including transaction costs, represents the cost of the crypto asset for the buyer.
Transactions involving the receipt of crypto assets in exchange for goods or services provided in the ordinary course of business with customers should follow the noncash consideration guidance in ASC 606, Revenue from Contracts with Customers (see CA 3). The receipt of crypto assets as part of an acquired business should be accounted for in accordance with ASC 805, Business combinations.
If a reporting entity obtains crypto assets from a non-customer in return for non-financial assets, ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, should be applied to determine the initial measurement of the acquired crypto asset. ASC 610-20 refers to the measurement principles of ASC 606-10-32-21, Measurement, to determine the transaction price when noncash consideration is received.

ASC 606-10-32-21

To determine the transaction price for contracts in which a customer promises consideration in a form other than cash, an entity shall measure the estimated fair value of the noncash consideration at contract inception (that is, the date at which the criteria in paragraph 606-10-25-1 are met).

The estimated fair value of the crypto asset received as noncash consideration is determined as of the contract inception date, which may differ from the date the crypto asset is received. See CA 3.1.3.
Example CA 2-1 addresses how to determine the transaction price when an exchange is denominated in crypto assets.
Noncash consideration – Accounting for crypto assets earned in connection with a revenue transaction
Security Inc enters into a contract to provide security services to Manufacturer over a six-month period in exchange for 12,000 units of crypto assets. The contract is signed and work commences on January 1, 20X1. The performance is satisfied over time and Security Inc will receive the units of crypto assets at the end of the six-month contract. For purposes of this example, assume that the crypto asset is readily convertible to cash.
How should Security Inc account for this transaction?
Security Inc should determine the transaction price by measuring the fair value of the 12,000 units of crypto assets at contract inception (i.e., on January 1, 20X1). Security Inc would measure its progress toward complete satisfaction of the performance obligation and recognize revenue each period based on the transaction price determined at contract inception. Security Inc should not adjust revenue to reflect any changes in the fair value of the crypto assets after contract inception.
Security Inc. separately determined that an embedded derivative was present in the receivable or contract asset. (See FSP 33.3.1 for a determination of whether the right to consideration is a receivable or contract asset.) In reaching that conclusion, Security Inc considered whether the embedded derivative should be separated from the host contract pursuant to ASC 815-15-25-1. It specifically also evaluated the definition of a derivative in ASC 815-10-15-83, including whether the crypto asset would meet the net settlement criteria.
Security Inc would recognize any changes in the embedded derivative through earnings separate from revenue.

2.1.2 Accounting for purchases of stablecoin
Stablecoins differ from other forms of crypto assets because they peg their value to a traditional asset, such as a fiat currency, in order to minimize price volatility. The issuer of the stablecoin may achieve this by collateralizing the stablecoin with the asset to which it is pegged (e.g., maintaining a reserve of the fiat currency).
To determine the appropriate accounting for a stablecoin, the holder of the crypto asset must determine if it represents a financial asset. Financial assets include contracts that provide a right to receive cash or another financial instrument from another entity.
Stablecoins may meet the definition of a financial asset if the contractual arrangement includes a right to receive cash from the issuer. Understanding the rights to demand redemption under the contract are critical to making this assessment as the contract may include provisions that limit the holder's ability to redeem the stablecoin for cash. Conditions that limit redemption at the discretion of the issuer would likely impact the ability to classify the holding as a financial asset. Contractual limitation on redemption based on conditions outside the control of the issuer (e.g., laws that prohibit redemption to those engaged in criminal activity) may require further legal analysis. In determining the classification, we believe a holder should consider:
  • the legal form of the stablecoin,
  • redemption rights,
  • collateralization,
  • counterparty risks,
  • contractual rights, and
  • applicable laws and regulations.

See CA 2.1.3 for the accounting if a stablecoin meets the definition of a financial asset. A stablecoin that does not meet the definition of a financial asset should be evaluated to determine if it is an intangible asset, which is described in CA 1.2.
2.1.3  Accounting for purchases of financial assets
If a crypto asset meets the definition of a financial asset, it should be analyzed to determine if it is a debt security under ASC 320, Investments – Debt securities, an equity security under ASC 321, Investments – Equity securities, or a receivable under ASC 310, Receivables. Additionally, ASC 825, Financial instruments, permits fair value accounting for instruments that meet the definition of a financial asset.

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