Accountants in the digital asset community can look back on the last year and measure meaningful progress. However, the industry of founders and builders has continued at a pace few anticipated.
The release of Accounting Standards Update (ASU) 2023-08 resolved an important measurement issue for many crypto assets. At the same time, FASB has continued to evaluate projects involving stablecoins, wrapped and receipt tokens, and crypto asset lending arrangements. Gross-versus-net revenue recognition remains a point of order, while smart contracts and evolving digital asset structures continue to create new accounting questions.
The central question remains: What does progress look like when the list of standards we contemplate is still long?
ASU 2023-08 & the Remaining Classification Challenge
Before the issuance of ASU 2023-08, many crypto assets were accounted for under Accounting Standards Codification (ASC) 350-30 using a cost-less-impairment model. The standard introduced a measurement model that more closely reflects the economics of qualifying crypto assets and represented a significant step forward for financial reporting.
However, a world of tokens remains outside the scope of ASU 2023-08. Tokens may convey ownership interests, governance rights, utility features, or claims on other assets. As a result, resolving the measurement question for qualifying crypto assets did not resolve the broader classification challenge. The accounting should follow what the token represents rather than its label or the blockchain on which it resides.
This remains an important ongoing challenge for the profession as digital asset structures continue to evolve.
Wrapped Tokens, Receipt Tokens, & Crypto Lending
FASB is evaluating whether certain wrapped and receipt tokens should be brought within the scope of ASU 2023-08 and is also considering guidance related to crypto asset lending arrangements.
At the August 2026 meeting, the Board tentatively decided that:
- Crypto asset lending transactions should not result in derecognition of the crypto asset.
- Encumbered crypto assets should be presented separately from other unencumbered crypto assets within the statement of financial position.
- Fair value measurement of encumbered crypto assets should consider the credit risk of the counterparty where credit risk exists.
The movement of a crypto asset does not automatically determine whether derecognition should occur. The analysis must consider what rights have been transferred, what rights have been retained, and who controls the asset. The project also includes proposed disclosure enhancements that would provide additional transparency regarding crypto asset lending activities, encumbrances, and related risks.
Stablecoins & the Definition of Cash Equivalents
Stablecoins have become an increasingly important part of the digital asset ecosystem, prompting FASB to issue a proposal in August 2026 on when certain stablecoins may qualify as cash equivalents under Topic 230.
The proposal focuses on several key characteristics, including direct redemption rights, reserve composition, reserve transparency, market liquidity, and the ability to convert the asset into a known amount of cash. Under the exposure draft, market liquidity alone may not be sufficient and the ability to sell an instrument through a liquid market is not necessarily the same as holding an enforceable right to redeem it with the issuer.
When applying the exposure draft examples, two holders of the same stablecoin may have different enforceable rights. As a result, the accounting analysis follows the rights held by the reporting entity rather than the label attached to the asset.
The stablecoin project illustrates how digital assets are pushing the profession to reconsider assumptions embedded in long-standing accounting concepts. Market liquidity, redemption rights, reserve transparency, and the nature of the reserves all may become important parts of the analysis.
Insights From Forvis Mazars: For more details on the proposal’s emphasis on direct redemption rights, reserve composition, and cash-equivalent classification under Topic 230, see Forvis Mazars’ article, “FASB’s Stablecoin Proposal on Cash Equivalent Classification.”
Gross Versus Net Revenue Recognition
Revenue recognition remains a significant consideration for many organizations operating within the digital asset ecosystem. As digital assets are nonfinancial intangible assets, the transfer of a digital asset under a contract with a customer is accounted for under ASC 606. Under ASC 606, entities must determine whether they control the specified good or service before it is transferred to the customer. If control exists, the entity generally acts as a principal and records revenue on a gross basis. If the entity facilitates a transaction between other parties, it may be acting as an agent and would, therefore, record revenue on a net basis.
The conclusion may affect SEC filer status, key performance indicators, and how investors interpret an organization’s scale and performance. A gross presentation can make revenue appear significantly larger than a net presentation even when the underlying economics are similar.
Understanding Smart Contracts
Smart contracts support mint-and-burn processes, token conversions, security management, and other automated financial transactions throughout the digital asset ecosystem.
Organizations must consider where decision making is embedded in code, how transactions executed through smart contracts should be accounted for, and what governance, logical security, change management, and operational controls are needed to support reliable financial reporting.
Accountants and auditors must understand how a contract operates, who can modify it, what data it relies on, and what rights and obligations the arrangement creates. Controls should address governance, administrative authority, wallet and signing practices, source code management, deployment, monitoring, incident response, and the integrity of oracle and external data sources.
Because no two smart contracts are necessarily alike, differences in governance structures, administrative rights, data dependencies, and economic terms may lead to different accounting conclusions. The code explains how a transaction is executed, but accounting professionals still must understand what the arrangement is designed to accomplish.
Conclusion: The Road Ahead
Progress does not mean every digital asset accounting question has been answered. It means the profession is developing a better framework for asking the right questions.
As new digital asset structures emerge, accountants will continue evaluating fundamental questions:
- What rights and obligations does the arrangement create?
- Who owns or controls the asset, and what has been transferred or retained?
- What evidence, governance, and controls support the accounting conclusion?
Innovation continues to exceed expectations, and the list of standards we contemplate remains long. Yet compared with where the profession stood only a few years ago, progress has been made.
How Forvis Mazars Can Help
Digital asset accounting continues to evolve alongside the technology itself. From token classification and stablecoin accounting to smart contracts and financial reporting, organizations face increasingly complex questions as new use cases emerge.
Forvis Mazars helps clients navigate these challenges by combining technical accounting knowledge with an understanding of the underlying technology, risks, and governance considerations that shape accounting outcomes.