IMA FRC comment letter response to proposed ASU on crypto assets

Wednesday, June 6, 2023

The IMA® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to the Financial Accounting Standards Board (FASB or Board) Proposed Accounting Standards Update (ASU) No. 2023-ED300, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 365-60): Accounting for and Disclosure of Crypto Assets (Proposal).

The FASB issued the Proposal in response to stakeholder feedback that the current accounting model for certain crypto assets fails to reflect the underlying economics. This model directs the accounting for crypto assets as indefinite-lived assets under a cost-less-impairment model. In issuing the Proposal, the Board intends to provide investors with decision-useful information regarding these assets.

In its comment letter, the FRC agrees with the Board’s conclusion that accounting for crypto assets within the scope of the Proposal at fair value with changes in fair value recognized in earnings is appropriate. This accounting is suitable because a holder of a crypto asset generates cash flows by selling or exchanging it for goods or services. 

However, to improve the Proposal, the Committee suggests that the Board:

  • Clarify the proposed amendments to Accounting Standards Codification paragraph 350-60-15-1(b), which addresses contracts with customers. The comment letter provides examples that illustrate the application of this scope guidance, and the Board may consider including these examples in a final standard.
  • Eliminate the exclusion of wrapped tokens from the proposed scope guidance. The FRC believes that this exclusion, if adopted, would result in accounting that is inconsistent with the economics of the crypto asset.
Read the Letter