ASU 2023-08 requires companies that follow US GAAP to measure Bitcoin and other in-scope crypto assets at fair value, with gains and losses flowing through net income every reporting period. It replaced the old cost-less-impairment model, which forced companies to write Bitcoin down when prices fell but never let them write it back up. The rule applies to public and private companies alike for fiscal years beginning after December 15, 2024, so calendar-year companies adopted it on January 1, 2025.
This article is for educational purposes only and is not accounting, tax, financial, investment, or legal advice. Loan terms and availability vary by jurisdiction. See full disclosures below.
For most calendar-year private companies, fiscal 2025 financial statements were the first full year reported under the new rule. That makes this a good moment for finance teams to step back and ask a bigger question: now that Bitcoin shows up at market value, how should it change the way we hold, report, and use it? This guide covers what the standard requires, what it means for earnings and lender relationships, and where borrowing against Bitcoin fits into a treasury strategy.
What Is ASU 2023-08?
ASU 2023-08 is an Accounting Standards Update issued by the Financial Accounting Standards Board (FASB) in December 2023. It created a new section of the accounting codification, Subtopic 350-60, Crypto Assets, which sets rules for how certain crypto assets are measured, presented, and disclosed after a company acquires them.
The key change is measurement. Under the standard, in-scope crypto assets are remeasured at fair value using the existing fair value framework in ASC 820. That means companies identify a principal market for each asset, value holdings at the exit price in that market at each reporting date, and record the change in net income.
A few details matter for implementation:
- Effective date: Fiscal years beginning after December 15, 2024, including interim periods within those years. There is no separate, later date for private companies.
- Transition: Companies recorded a one-time cumulative-effect adjustment to opening retained earnings in the year of adoption, which captured the gap between the old impaired carrying value and fair value.
- What it does not cover: The standard addresses measurement after acquisition, presentation, and disclosure. It does not provide new guidance on initial recognition or derecognition, which matters when crypto is lent, pledged, or transferred to a third party.
Which Crypto Assets Fall Under the New Rules?
Not every token qualifies. A crypto asset is in scope only if it meets all of the following criteria:
- It meets the accounting definition of an intangible asset.
- It does not give the holder enforceable rights to, or claims on, underlying goods, services, or other assets.
- It is created or resides on a distributed ledger, such as a blockchain.
- It is secured through cryptography.
- It is fungible.
- It was not created or issued by the reporting company or its related parties.
Bitcoin and ether generally meet every criterion. Many fiat-backed stablecoins, such as USDC and USDT, generally do not, because holders typically have a right to redeem them for dollars. Wrapped tokens and other assets that represent a claim on something else often fall outside the scope as well. Your auditors should confirm the classification of each asset you hold.
Before and After: Cost-Less-Impairment vs. Fair Value
The old model created a one-way ratchet. If Bitcoin fell even briefly below cost during a reporting period, the company recorded an impairment. If the price then doubled, the balance sheet stayed at the lower number until the asset was sold. The new model removes that asymmetry.
| Before ASU 2023-08 | Under ASU 2023-08 | |
|---|---|---|
| Accounting model | Indefinite-lived intangible, cost less impairment | Fair value, remeasured every reporting period |
| Price declines | Written down as impairment | Recorded as a loss in net income |
| Price recoveries | Never written back up | Recorded as a gain in net income |
| Balance sheet | Often understated versus market value | Shown at fair value, separate from other intangibles |
| Income statement | Impairments only, one direction | Gains and losses shown separately from other intangibles |
| Disclosures | Limited | Holdings, cost basis, units, restrictions, and annual rollforward |
What Companies Now Have to Disclose
ASU 2023-08 adds a meaningful set of disclosures. For both interim and annual periods, companies generally need to report:
- The name, cost basis, fair value, and number of units for each significant crypto holding, plus aggregate figures for holdings that are not individually significant.
- The fair value of crypto assets subject to contractual sale restrictions, along with the nature and remaining duration of those restrictions.
Annual reports also require a rollforward showing additions, dispositions, gains, and losses during the year, details on the cost basis and gains or losses of assets sold, and the method used to determine cost basis. For companies that hold Bitcoin as a treasury asset, this means more documentation and a cleaner audit trail from day one.
How Fair Value Accounting Changes Corporate Bitcoin Strategy
The accounting change does not change what Bitcoin is. It changes how visible its price movements are to everyone who reads your financial statements. That has practical consequences.
Earnings Volatility Becomes Visible
Under fair value, a strong quarter for Bitcoin can lift reported net income well beyond what the operating business earned, and a weak quarter can turn a profitable quarter into a reported loss. Finance teams increasingly present results with and without crypto remeasurement so owners, investors, and lenders can see operating performance on its own. If your company reports on a non-GAAP or adjusted basis, decide how you will treat crypto gains and losses and apply that choice consistently.
Loan Covenants and Lender Conversations
Many bank facilities include covenants tied to net income, EBITDA, net worth, or leverage ratios. Fair value swings can move those numbers without any change in the underlying business. Review how your existing credit agreements define these terms, and whether crypto remeasurement is excluded. If it is not, raise the issue with your lender before a volatile quarter forces the conversation.
Board Reporting and Treasury Policy
Fair value reporting puts Bitcoin in front of the board every period, not only when the company buys or sells. That is a good reason to formalize a written treasury policy covering target allocation, custody, who can authorize transactions, rebalancing triggers, and how the company will access liquidity without being forced to sell during a downturn. Our practical guide to Bitcoin treasury management walks through the building blocks.
The Tax Picture: Book Gains Are Not Taxable Gains
Fair value accounting changes book income, not taxable income. For federal tax purposes, the IRS treats Bitcoin as property, so gains and losses are generally recognized only when an asset is sold or otherwise disposed of. The gap between book value and tax basis creates deferred tax balances that your accountants will track.
Very large corporations have one more consideration. The corporate alternative minimum tax (CAMT) is a 15% minimum tax on adjusted financial statement income for corporations whose three-year average exceeds $1 billion. Because fair value gains show up in financial statement income, crypto holders worried they could owe CAMT on unrealized gains. In Notice 2025-49, released in September 2025, Treasury and the IRS gave companies an election to disregard unrealized fair value gains and losses on items that are not marked to market for regular tax purposes, which can include digital assets. The guidance is interim and subject to requirements, so confirm eligibility with a tax advisor.
For most private companies, CAMT will not apply. The larger tax planning question is usually whether to sell appreciated Bitcoin to raise cash, which can trigger a taxable gain, or to keep the position and borrow against it.
Where Borrowing Against Bitcoin Fits
Fair value accounting makes one tradeoff easier to see. Selling Bitcoin to fund payroll, inventory, an acquisition, or a tax payment locks in a realized gain and removes the asset from the balance sheet. Borrowing against Bitcoin keeps the position in place while giving the business working capital, which we cover in detail in how businesses use crypto-backed credit.
From an accounting perspective, a crypto-backed loan is recorded as a liability, and interest is recognized as expense over the life of the loan. A fixed rate and set payment schedule can add predictability to a balance sheet that already carries a volatile asset at market value. Whether that interest is deductible depends on how the proceeds are used; see our post on whether Bitcoin loan interest is tax deductible.
Pledging Bitcoin as collateral also raises accounting questions your auditors should weigh in on before you close:
- Does the Bitcoin stay on your balance sheet? ASU 2023-08 does not address derecognition. Whether pledged Bitcoin remains your asset depends on the loan terms, including whether the lender can sell, lend, or rehypothecate it.
- Does it need to be disclosed as restricted? Collateral that cannot be sold during the loan may need to be described in your restriction disclosures.
- How will margin calls be handled? A sharp price drop can require additional collateral or a paydown. Know your LTV thresholds and options in advance. Our explainer on margin calls covers the mechanics, and SALT offers optional Stabilization and SALT Shield® features for downside protection.
SALT offers Bitcoin-backed loans for businesses with terms of 1, 3, or 5 years depending on jurisdiction and LTV, and larger borrowers can work with our Private Clients team. See current pricing on our rates and fees page, and review how to vet a crypto lender for custody questions worth asking any provider.
A Practical Checklist for Finance Teams
- Confirm scope for every crypto asset you hold, especially stablecoins and wrapped tokens.
- Document your principal market and pricing source for each asset, and apply it consistently at every reporting date.
- Build the disclosure package, including holdings by asset, cost basis method, restrictions, and the annual rollforward.
- Review loan covenants for how net income and EBITDA treat fair value gains and losses.
- Update board reporting to show operating results with and without crypto remeasurement.
- Coordinate with tax advisors on deferred taxes and, for large corporations, the CAMT election.
- Plan liquidity before you need it, including whether you would sell or borrow if the business needed cash.
Frequently Asked Questions
Does ASU 2023-08 apply to private companies?
Yes. The standard applies to all entities that report under US GAAP, including private companies and not-for-profits, with the same effective date: fiscal years beginning after December 15, 2024.
How do companies account for Bitcoin under GAAP now?
Bitcoin is measured at fair value at each reporting date, with changes recorded in net income. It is presented separately from other intangible assets on the balance sheet.
Are stablecoins covered by ASU 2023-08?
Generally not. Most fiat-backed stablecoins give holders a right to redeem for dollars, which fails the scope criterion requiring no enforceable claim on underlying assets. Confirm treatment with your auditors.
Are unrealized Bitcoin gains taxable for companies?
Generally no for regular federal income tax, since Bitcoin is treated as property and taxed when disposed of. Large corporations subject to CAMT may elect to disregard unrealized fair value gains under interim IRS guidance in Notice 2025-49.
What happened to previously impaired Bitcoin when companies adopted the rule?
Companies recorded a cumulative-effect adjustment to opening retained earnings in the year of adoption, bringing holdings from their impaired carrying value up to fair value.
Does pledging Bitcoin as loan collateral change its accounting?
It can. ASU 2023-08 does not address derecognition, so treatment depends on the loan terms, such as whether the lender can rehypothecate the collateral. Pledged assets may also need to be disclosed as restricted.
Can a business borrow against Bitcoin instead of selling it?
Yes. A Bitcoin-backed business loan provides working capital while the company keeps its position, which avoids realizing a taxable gain from a sale. The loan is recorded as a liability, and the collateral remains subject to margin calls if prices fall.
This article is for informational and educational purposes only and does not constitute accounting, tax, financial, investment, or legal advice. Accounting treatment depends on your specific facts, contracts, and auditor review. Tax guidance, including interim IRS notices, may change. Consult your own accounting, tax, financial, and legal advisors before making decisions about digital asset holdings, financial reporting, or borrowing.
SALT loans are originated by SALT Lending LLC (f/k/a SALT Master Fund II, LLC), NMLS 1711910. Rates, terms, fees, LTV options, and collateral types are subject to change and may vary based on loan amount, qualifications, jurisdiction, and collateral profile. Loan terms may not be available in your jurisdiction, for your requested loan amount, and/or preferred collateral type. SALT loans are subject to jurisdictional limitations and other restrictions. For a list of jurisdictions where SALT currently lends, visit saltlending.com/map-list. SALT does not offer loans to all prospective borrowers. Additional terms, conditions, and restrictions may apply.
Borrowing against collateral entails risk and may not be appropriate for your needs. Digital currency is not legal tender, is not backed by the United States or any other government, and SALT accounts are not subject to FDIC or SIPC protections. Digital assets are highly volatile, and you could lose some or all of your collateral.
