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5.1 Presentation and disclosure requirements for crypto assets
Publication date: 31 Dec 2023
us Crypto assets guide
Figure CA 5-1 summarizes some of the more common presentation and disclosure requirements that should be considered by reporting entities based on the nature of the crypto assets. However, this list is not exhaustive and will need to be tailored to develop disclosures that are specific to the entity and the relevant facts and circumstances.
Figure CA 5-1
Summary of presentation and disclosure requirements for crypto assets
Summary of presentation and disclosure requirements for crypto assets
Accounting guidance | Requirement | Additional information |
|---|---|---|
ASC 275, Risks and Uncertainties
| Given the risks and uncertainties associated with certain crypto assets, reporting entities should consider the need for disclosures about the nature of the crypto asset activities they are undertaking, the use of estimates for fair value, and any vulnerabilities due to concentration of risk due to a lack of diversification.
| |
ASC 350-30, Intangibles – Goodwill and Other – General Intangibles Other Than Goodwill
| When an impairment is recognized on crypto assets accounted for as intangible assets not in scope of ASC 350-60, include a description of the circumstances leading to the impairment, the amount of the impairment, the caption in the income statement that includes the impairment loss, and the segment in which the impaired asset is reported.
| FSP 8.8.1
|
ASC 350-60, Intangibles – Goodwill and Other – Accounting for and Disclosure of Crypto Assets
| In-scope crypto assets are required to be presented separately from other intangible assets on the balance sheet. Remeasurement of those crypto assets is required to be recorded separately from amortization or impairment of other intangible assets in the income statement. Additional disclosures are required, including significant crypto asset holdings and a reconciliation of the beginning and ending balances of crypto assets
. | |
ASC 820, Fair Value Measurement
| When the crypto asset is a financial asset, include the relevant disclosures for an instrument that is recorded at fair value on a recurring basis.
For crypto assets that are recognized as intangible assets not in scope of ASC 350-60, include the fair value disclosure for assets recorded at fair value on a non-recurring basis.
For crypto assets that are recognized as intangible assets in scope of ASC 350-60, include the fair value disclosure for assets recorded at fair value on a recurring basis.
For reporting entities in scope of SAB 121 that are required to recognize a crypto asset safeguarding liability and corresponding asset, include the fair value disclosure for liabilities and assets recorded at fair value on a recurring basis, respectively.
| |
AICPA’s Digital Assets Practice Aid
| Question 25 of the AICPA’s Digital Assets Practice Aid provides examples of disclosures that may be applicable to the lender in a crypto lending arrangement.
| |
Additional considerations for SEC registrants
| Regulation S-X Article 5 requires registrants to separately state each class of intangible asset that is in excess of 5% of total assets. The amount of significant additions or deletions related to these assets should be disclosed in a footnote.
Registrants should also consider additional disclosures outside of the financial statements, including any material information that may be necessary to ensure the financial statements are not misleading. In meeting their disclosure obligations, registrants should consider disclosures related to the description of the business, risk factors, and management’s discussion and analysis. For additional information and illustrative examples of comments, refer to the SEC’s Sample Letter to Companies Regarding Recent Developments in Crypto Asset Markets.
|
Note about ongoing standard setting
In December 2023, the AICPA Assurance Services Executive Committee issued an exposure draft, Proposed criteria for the presentation of the sufficiency of assets for redemption: Specific to asset-backed fiat-pegged tokens, to propose criteria for the reporting on the sufficiency of assets for redemption (e.g., cash, cash equivalents, other assets) specific to asset-backed tokens pegged to a fiat currency (commonly referred to as “stablecoins”). The exposure draft addresses three primary topics along with related disclosures:
- Issuer’s redeemable tokens outstanding
- Redemption assets available to redeem tokens outstanding
- Comparison of the balance of redemption assets available to redeem tokens and the issuer’s redeemable tokens outstanding
Comments on the proposed framework are due by January 29, 2024. Financial statement preparers and other users of this publication are therefore encouraged to monitor the status of the project, and if finalized, evaluate the effective date of the new guidance and the disclosure implications.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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