--- title: "View from the FASB and leading auditors: unpacking the trickiest issues in digital asset accounting" description: FASB addresses key issues in digital asset accounting, focusing on stablecoins, crypto transfers, and the complexities of on-chain revenue recognition. image: https://blog.cryptio.co/hubfs/4.%20Panel%204_View%20from%20the%20FASB%20(1).jpg --- [![Cryptio logo](https://blog.cryptio.co/hubfs/raw_assets/public/Cryptio_October2021/images/logo-black.svg "Cryptio logo")](https://cryptio.co/) - Solutions ![accounting-firms-green-bordered.b2040145-3](https://blog.cryptio.co/hubfs/accounting-firms-green-bordered.b2040145-3.svg) ##### [Accounting and Tax](https://cryptio.co/solutions/accounting-tax) [Automate GAAP & IFRS compliant reporting](https://cryptio.co/solutions/accounting-tax) ![internal-controls-green-bordered.eaefa46d-1](https://blog.cryptio.co/hubfs/internal-controls-green-bordered.eaefa46d-1.svg) ##### [Internal controls](https://cryptio.co/solutions/internal-controls) [Ensure completeness and accuracy of crypto data to an auditable standard](https://cryptio.co/solutions/internal-controls) ![Nav bar icons\_Blockchain Foundations](https://blog.cryptio.co/hubfs/Nav%20bar%20icons_Blockchain%20Foundations.svg) ##### [Reconciliation](https://cryptio.co/solutions/reconciliation) [Reconcile crypto balances and transactions with internal systems](https://cryptio.co/solutions/reconciliation) [![build-vs-buy-guide.64b11d10-1](https://blog.cryptio.co/hubfs/build-vs-buy-guide.64b11d10-1.svg)](https://landing.cryptio.co/build_vs_buy) ##### [Build your back-office](https://landing.cryptio.co/build_vs_buy) Learn why leading enterprises choose to buy rather than build their own back-office solutions [Download guide](https://landing.cryptio.co/build_vs_buy) - 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[Download guide](https://landing.cryptio.co/guides/how-to-get-audit-ready) [![build-your-back-office-nav.7bffac50](https://blog.cryptio.co/hubfs/build-your-back-office-nav.7bffac50.svg)](https://landing.cryptio.co/guides/back-office-playbook) ##### [Build your back-office](https://landing.cryptio.co/guides/back-office-playbook) Accounting & reportingfor crypto-native businesses [Download guide](https://landing.cryptio.co/guides/back-office-playbook) - [Pricing](https://cryptio.co/pricing) - [Careers](https://cryptio.co/careers) [![Sign in](https://no-cache.hubspot.com/cta/default/20275766/989fa2da-65dc-4b42-96c1-3d9abcc57425.png)](https://cta-redirect.hubspot.com/cta/redirect/20275766/989fa2da-65dc-4b42-96c1-3d9abcc57425) [![Book a demo](https://no-cache.hubspot.com/cta/default/20275766/7f093aaf-1bd4-4545-97c6-c5ac040f256c.png)](https://cta-redirect.hubspot.com/cta/redirect/20275766/7f093aaf-1bd4-4545-97c6-c5ac040f256c) - ![LinkedIn](https://blog.cryptio.co/hubfs/LinkedIn.svg) - ![Twitter](https://blog.cryptio.co/hubfs/Twitter.svg) ![](https://blog.cryptio.co/hubfs/4.%20Panel%204_View%20from%20the%20FASB%20(1).jpg) **[Greg Bland](https://blog.cryptio.co/author/greg-bland) |** October 16, 2026 - [Crypto Finance Forum](https://blog.cryptio.co/tag/crypto-finance-forum) ## View from the FASB and leading auditors: unpacking the trickiest issues in digital asset accounting ## View from the FASB and leading auditors: unpacking the trickiest issues in digital asset accounting #### Key takeaways - **FASB is tackling two major gaps in digital-asset accounting.** Its current work addresses whether certain stablecoins can qualify as cash equivalents, alongside the accounting for wrapped and receipt tokens, crypto loans and other crypto-asset transfers. - **Stablecoin classification affects more than the balance sheet.** How a stablecoin is classified can materially change the way liquidity and cash movements appear in financial statements. - **Existing revenue guidance is struggling with the mechanics of on-chain activity.** Small differences in how exchanges, validators, staking products and smart contracts operate can lead to very different accounting conclusions. - **Auditing on-chain activity increasingly requires understanding the underlying technology.** Finance teams and auditors may need to examine smart-contract code, access rights, change controls and the reliability of blockchain data before they can reach an accounting conclusion. #### Panelists - [Aarika Friend](https://www.linkedin.com/in/aarika-friend-07abb7b) – Assistant Director | [Financial Accounting Standards Board (FASB)](https://www.linkedin.com/company/fasb/) - [Marissa Scicchitano](https://www.linkedin.com/in/marissascicchitano) – Audit Principal | [Wolf & Company](https://www.linkedin.com/company/wolf-%26-company-p-c-/) - [Steven J. Baum](https://www.linkedin.com/in/blockchainbaum) – Managing Director & Digital Assets and Blockchain Practice Co-Leader | [CBIZ](https://www.linkedin.com/company/cbiz/) - [Geron Morgan](https://www.linkedin.com/in/geron-morgan-b68b733) – Partner | [Forvis Mazars US](https://www.linkedin.com/company/forvis-mazars-us/) - **Moderator:** [Jeff Rundlet](https://www.linkedin.com/in/jrundlet-cfa) – SVP & Managing Director, Americas | [Cryptio](https://www.linkedin.com/company/cryptio/) ### Longstanding accounting questions are becoming harder to defer Some of the hardest questions in digital-asset accounting have been around for years. Crypto lending, staking, wrapped assets, DeFi and principal-versus-agent judgments have long required accountants to apply standards written for very different types of transactions. Over time, audit firms have developed more experience dealing with them, but significant areas still depend on interpretation, analogy and the specific facts of a transaction. Geron Morgan described that tension from the auditor's perspective. Issues that were difficult a year ago may now be easier to audit because firms have seen them before. At the same time, existing accounting codification was largely built around traditional financial activity, leaving practitioners to continue to try to work out how digital-asset structures fit into it. > *“The industry moves at a rapid pace. So we are essentially chasing a rabbit around a track from a profession perspective.”* > > – **Geron Morgan, Forvis Mazars** The result is a growing body of digital-asset activity for which the economics may be understood, but the accounting treatment is still being worked through. FASB is now addressing some of those gaps directly. ### FASB is focusing on stablecoins and crypto transfers Aarika Friend outlined two major digital-asset workstreams currently being pursued by FASB. The first looks at whether certain digital assets, including qualifying stablecoins, can meet the existing definition of a cash equivalent. The second addresses **crypto-asset transfers**. That work includes bringing certain wrapped and receipt tokens into the scope of the existing crypto-asset fair-value guidance and clarifying when transferred crypto assets should remain recognized or be derecognized. FASB currently lists both as formal technical-agenda projects: [Cash Equivalents—Disclosure Enhancement and Classification of Certain Digital Assets](https://fasb.org/projects/current-projects/classification-of-certain-digital-assets-as-cash-equivalents-423255?utm_source=chatgpt.com) and [Accounting for Transfers of Crypto Assets](https://fasb.org/projects/current-projects/accounting-for-transfers-of-crypto-assets-423368?utm_source=chatgpt.com). Other questions remain further back in the process. Aarika said FASB had also received stakeholder feedback around **gross-versus-net or principal-versus-agent accounting and tokenized-asset issuer accounting**, but distinguished these from the two projects already taken forward by the Board. In short, there is definite movement on digital-asset accounting clarity, but there is still a sizeable backlog of issues that have not yet reached formal standard-setting. ### What makes a stablecoin a cash equivalent? The stablecoin project starts with an apparently straightforward question: when should an asset designed to maintain a stable value be treated in the same way as cash equivalents? Rather than create an entirely new category specifically for digital assets, Aarika explained that FASB chose to work from the existing cash-equivalent definition and provide illustrative examples for applying it. Among the important considerations are whether the holder has a **direct, on-demand redemption right for a known amount of cash**, alongside the nature of the reserve assets supporting the instrument. Applicable laws and regulations also matter, and treating an eligible asset as a cash equivalent would remain an accounting-policy election rather than a mandatory classification. One particularly interesting decision was linguistic. FASB deliberately avoided building the guidance around a formal definition of the word **stablecoin**. The aim was to describe the relevant economic characteristics instead, reducing the risk that terminology or product development quickly makes the guidance obsolete. However, this still leaves an important implementation question. ### Direct redemption can change cash equivalence for the same asset Marissa Scicchitano highlighted the difficulty created by the proposed emphasis on direct redemption. Imagine two companies each holding USDC. One has an account with Circle and a direct contractual right to redeem the asset with the issuer. The other has no direct relationship with Circle, but holds the same USDC and can immediately convert it into dollars through a highly liquid exchange or secondary market. Both businesses may use the asset for essentially the same economic purpose. Yet their accounting classification could differ because only one has direct redemption rights with the issuer. That raises a comparability question across companies and could even influence operational decisions, such as whether a company opens a direct issuer account partly to support a particular accounting treatment. The consequences also reach beyond the balance sheet. Steven Baum argued that the larger problem can be the statement of cash flows. A digital-asset business may use stablecoins routinely as part of its operational liquidity while accounting rules keep those movements outside cash. > *“Cash flow, to me, is really where we just have unusable information right now.”* > > – **Steven Baum, CBIZ** The question therefore becomes one of usefulness as much as classification: do the financial statements accurately communicate how the company manages and moves liquidity? ### A small product change can produce a very different accounting result The panel then returned to one of the industry's longest-running accounting problems: principal versus agent, and whether revenue should consequently be presented on a gross or net basis. ASC 606 looks at indicators including responsibility for fulfilling a transaction, inventory risk and influence over pricing. Marissa explained that those indicators do not always relate neatly in crypto. An exchange may hold private keys and execute trades while still acting more like an intermediary. An order-book transaction between two customers may support one conclusion. Change the product so that an instant-buy order is fulfilled directly from the exchange's own inventory and the conclusion can change. That makes detailed understanding of how the product operates essential. A seemingly small backend change can have a significant impact on the accounting and ultimately the books and records. The same issue appears in staking. The phrase “we stake” can describe very different activities: operating a validator, facilitating customer staking through third-party infrastructure, or staking the company's own assets with someone else's validator. They may all appear similar at a high level. The accounting analysis underneath them can be very different. That creates an increasingly important relationship between **product design and accounting**. Finance teams need to understand precisely how the product works, while product teams need to understand that technical design decisions can drive financial-reporting consequences. ### On-chain revenue needs common characteristics guidance, not chain-by-chain rules Steven described on-chain revenue as one of the biggest areas of accounting uncertainty now facing digital-asset businesses. Validator and staking activity can differ significantly between networks. There may be lock-up periods, slashing windows, variable reward structures, different relationships between validators and delegators, and different arrangements around control of assets and private keys. Writing a separate accounting approach for every blockchain would quickly become unmanageable. Steven instead argued for a common set of characteristics that accountants and auditors can assess across networks. Does the arrangement have a lock period? Is capital exposed to slashing? Who controls the asset? Who performs the service? How are rewards generated and distributed? If those characteristics can be standardized, different types of on-chain activity can be grouped more consistently without requiring an accounting rule for every protocol or blockchain. That becomes increasingly important as on-chain activity feeds directly into the income statement. The technology may differ from network to network, but finance teams still need a repeatable method for translating what happened on-chain into a defensible accounting conclusion. ### Wrapped and receipt tokens move into fair-value accounting One part of FASB’s crypto-transfers project addresses the accounting for wrapped and receipt tokens themselves. Under the existing crypto-asset guidance, an asset can fall outside ASC 350-60 if it gives the holder an enforceable right to another asset. That has created an awkward outcome for assets such as wrapped tokens, which can be economically very similar to the crypto asset they represent but subject to a different accounting model. FASB has tentatively decided to expand the scope of ASC 350-60 so that crypto assets giving the holder a right to receive another crypto asset already within the standard can also qualify for fair-value accounting. That means qualifying wrapped and receipt tokens would be measured at fair value, with changes reflected through earnings, rather than falling outside the crypto-asset guidance simply because they represent a claim on another crypto asset. For the Board, the objective is greater consistency between assets that may have very similar economics but currently receive different accounting treatment. ### When should transferred crypto leave the balance sheet? The second part of the project deals with a different question: what happens to the original crypto asset when it is transferred? For a straightforward crypto loan, the tentative approach discussed on the panel would generally keep the asset on the lender’s balance sheet. Rather than derecognizing it, the lender would reclassify it as an encumbered crypto asset and continue measuring it at fair value, incorporating the borrower’s credit risk. Other transfers require a different analysis. If, for example, Bitcoin is transferred into a wrapping arrangement and WBTC is received in return, the question becomes whether control of the original Bitcoin has been transferred and the BTC should therefore be derecognized. FASB is applying the concept of control from ASC 606, supplemented with crypto-specific indicators around areas such as access and private keys. > *“Revenue recognition was not obviously written back in 2014 with crypto assets in mind.”* > > – **Aarika Friend, FASB** The Board expects many wrapped and receipt-token transactions to result in derecognition of the original crypto asset, after which the token received in return would be accounted for under the applicable guidance. The distinction matters because the accounting question is not simply whether two tokens have similar economics. Finance teams need to determine both **how the new token should be measured** and **whether the asset transferred into the arrangement should remain on the balance sheet at all**. ### When the contract is code The problem becomes even more difficult in DeFi. Jeff Rundlet asked what it means to assess control when the counterparty or arrangement is a smart contract. Marissa's answer illustrated just how far the accounting process can move into technical infrastructure. > *“The first thing you ask for when you're evaluating a 606 contract is, ‘Can I have a copy of your contract?’ Obviously, that's not possible for a smart contract.”* > > – **Marissa Scicchitano, Wolf & Company** Instead, the accountant may need to understand what the code itself does. Can the company withdraw its assets at any time? Is there a lock-up period? What rights remain once assets enter the protocol? Has economic control passed elsewhere? And there is another question before the accounting analysis can even begin: **does the code behave the way it is supposed to?** That may require specialist technical expertise, smart-contract reviews and an understanding of how the protocol executes in practice. Only then can the finance team determine what has happened economically and how it should be recognized. ### Smart contracts are changing the audit team That also changes who needs to participate in the audit. Geron argued that when an accounting conclusion depends on the mechanics of a smart contract, the process can no longer sit entirely within the accounting function. CTOs, engineers and programmers may need to help management and auditors understand what the code does and how the relevant transaction works. This extends into internal controls. Who has permission to modify the smart contract? What change-management process governs those modifications? How does the company know when something has changed? Marissa pointed out that a smart contract can potentially be altered while a company's assets are already inside a protocol. That can affect the rights attached to the assets, the company's accounting analysis and potentially the safety of the assets themselves. > *“A smart contract can be changed once your assets are already in the protocol. That doesn't happen in a normal 606 contract.”* > > – **Marissa Scicchitano, Wolf & Company** The traditional boundary between finance, technology, risk and audit therefore becomes much less distinct when financial activity itself is being executed through software. ### Auditors also need to know when blockchain data can be trusted Accounting standards are only part of the challenge. When Jeff asked what the profession should tackle next, Marissa turned to **audit standards and the reliability of blockchain data**. For an auditor, seeing a transaction on a blockchain does not automatically resolve questions of completeness, accuracy, ownership or the reliability of the data being used as audit evidence. The industry therefore needs more consistent answers to questions such as: - When can an auditor rely on data sourced from a blockchain? - Does the maturity or architecture of the network matter? - What controls need to exist around the extraction and transformation of that data - What evidence demonstrates that the information used by the finance team is complete and accurate? Marissa argued that clearer auditing standards – including at the PCAOB level – would help the profession keep pace with the accounting questions FASB is beginning to address. For digital-asset businesses, this is fundamental. The accounting conclusion may be correct, but it still depends on a reliable record of the underlying transactions. ### Does digital-asset accounting eventually need its own home? The panel closed with a broader question about where standard-setting goes from here. FASB has already addressed fair-value accounting for certain crypto assets and is now moving into stablecoins, wrapped assets, crypto lending and derecognition. But principal-versus-agent, tokenized-asset issuer accounting, smart contracts and other forms of on-chain activity continue to raise questions that do not always fit neatly into existing guidance. Geron's longer-term wish was therefore ambitious: > *“My big wish list item is that we have a whole set of accounting pronouncements that relate directly to digital assets.”* > > – **Geron Morgan, Forvis Mazars** Whether digital assets ultimately require a dedicated body of accounting guidance remains an open question. What the panel made clearer is the scale of the implementation challenge. The underlying concepts of control, ownership, revenue, cash, risk and fair value still matter. The difficulty is applying them consistently when assets move through blockchains, transactions execute through code and the economic substance of two superficially similar products can be very different. After years of dealing with many of those questions transaction by transaction, the pressure for clearer and more repeatable answers is growing. #### About Cryptio Cryptio is an institutional-grade data engine for accounting, reconciliation, fund administration and credit in the digital assets and AI era. Digital-asset accounting starts with being able to establish exactly what happened across blockchains, custodians, exchanges, wallets, DeFi protocols and internal systems – and trace that activity reliably into the books. Cryptio transforms complex on- and off-chain activity into normalized, reconciled and auditable financial records, giving finance teams a consistent data layer for accounting, close, reporting and audit. As accounting and auditing standards develop around stablecoins, crypto transfers, on-chain revenue and increasingly complex digital-asset activity, finance teams need reliable underlying evidence for the judgments they make. Cryptio provides the financial data infrastructure to support that process. **[Request a demo](https://cryptio.co/demo).** #### Table of contents - [Longstanding accounting questions are becoming harder to defer](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-1) - [FASB is focusing on stablecoins and crypto transfers](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-2) - [What makes a stablecoin a cash equivalent?](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-3) - [Direct redemption can change cash equivalence for the same asset](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-4) - [A small product change can produce a very different accounting result](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-5) - [On-chain revenue needs common characteristics guidance, not chain-by-chain rules](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-6) - [Wrapped and receipt tokens move into fair-value accounting](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-7) - [When should transferred crypto leave the balance sheet?](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-8) - [When the contract is code](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-9) - [Smart contracts are changing the audit team](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-10) - [Auditors also need to know when blockchain data can be trusted](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-11) - [Does digital-asset accounting eventually need its own home?](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-12) - [About Cryptio](https://blog.cryptio.co/view-from-the-fasb-and-leading-auditors-unpacking-the-trickiest-issues-in-digital-asset-accounting#anchor-13) ### Explore how Cryptio can help. [![Book a demo](https://no-cache.hubspot.com/cta/default/20275766/7f093aaf-1bd4-4545-97c6-c5ac040f256c.png)](https://cta-redirect.hubspot.com/cta/redirect/20275766/7f093aaf-1bd4-4545-97c6-c5ac040f256c) [Back to blog](https://blog.cryptio.co) ### Discover more from Cryptio - [Insider](https://blog.cryptio.co/tag/insider) ### [Cryptio in conversation with Forvis Mazars: SAB121 reporting for crypto enterprises](https://blog.cryptio.co/cryptio-forvis-mazars-sab121) 8 minute read - [Insider](https://blog.cryptio.co/tag/insider) ### [Banks and Custodians: De-risking your digital asset products in 2024 with Fireblocks, Coincover, AlphaPoint and Notabene](https://blog.cryptio.co/banks-and-custodians-de-risking-your-digital-asset-products-in-2024-with-fireblocks-coincover-alphapoint-and-notabene) 4 minute read - [Crypto Finance Forum](https://blog.cryptio.co/tag/crypto-finance-forum) ### [Crypto accounting standards w. the FASB, Deloitte & RSM](https://blog.cryptio.co/crypto-accounting-standards-w.-the-fasb-deloitte-rsm) 4 minute read ## Book a meeting with *our experts* On the call we can set you up with a sandbox account so you can try Cryptio for yourself. ![Letter icon](https://blog.cryptio.co/hubfs/raw_assets/public/Cryptio_October2021/images/letter.svg) - Enterprise-grade security - Online support - Instant access ![Letter icon](https://blog.cryptio.co/hubfs/raw_assets/public/Cryptio_October2021/images/loop.png) ![Letter icon](https://blog.cryptio.co/hubfs/raw_assets/public/Cryptio_October2021/images/ethereum_bitcoin_coin.png) ![Cryptio logo](https://blog.cryptio.co/hubfs/raw_assets/public/Cryptio_October2021/images/logo-white.svg "Cryptio logo") [![LinkedIn](https://blog.cryptio.co/hubfs/LinkedIn.svg)](https://www.linkedin.com/company/cryptio) [![Twitter](https://blog.cryptio.co/hubfs/Twitter.svg)](https://twitter.com/cryptio_co) ![soc-logo](https://blog.cryptio.co/hs-fs/hubfs/Imported%20images/soc-logo.png?width=38&name=soc-logo.png "soc-logo") ### Product - [Use cases](https://cryptio.co) - [Solutions](https://cryptio.co) - [Pricing](https://cryptio.co/pricing) - [Integrations](https://cryptio.co/integrations) ### Support - [Contact us](https://cryptio.co/contact) - [Help center](https://support.cryptio.co/hc/en-gb) ### Company - [Partners](https://cryptio.co/partners) - [Blog](https://blog.cryptio.co/) ### Legal - [Terms & Conditions](https://cryptio.co/terms) - [Privacy policy](https://cryptio.co/privacy) ### Don’t miss an update Sign up for our newsletter for the latest Cryptio news & insights All Rights Reserved - Inquiries: [security@cryptio.co](mailto:security@cryptio.co)