How Crypto Assets and Tokenized Securities Are Recognized and Measured under IFRS and US GAAP

Crypto assets and tokenized instruments introduce non-traditional rights that must still fit within existing accounting frameworks. Under IFRS (IAS 38, IAS 2, IFRS 9, IAS 32, IFRS 15) and US GAAP (ASC 350, ASU 2023-08; ASC 820; ASC 321/320/326; ASC 815; ASC 480), accounting hinges on what the holder or issuer actually owns: a non-monetary digital asset (e.g., Bitcoin) or a financial instrument (e.g., a tokenized equity or debt). Classification drives measurement—cost/impairment, amortized cost, or fair value—and presentation, including disclosures on custody risks, valuation inputs, and rights embedded in smart contracts.

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How crypto assets and tokenized securities arise.

Crypto assets such as Bitcoin or Ether usually confer no claim on an identifiable counterparty and no cash-flow contract; they are typically acquired for treasury allocation, trading, or facilitation of network activity (gas, staking, collateral). By contrast, tokenized securities (equity or debt “wrapped” on-chain) represent contractual rights to cash flows and are economically equivalent to traditional securities despite using distributed ledgers for issuance and settlement.

This distinction determines whether the item is a non-financial intangible (crypto) or a financial asset/liability (tokenized security), with consequences for measurement, impairment, and income statement geography.

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Classification and measurement under IFRS.

1) Holdings of cryptocurrencies (e.g., BTC, ETH) — generally IAS 38 or IAS 2.

• IAS 38 Intangible assets (indefinite life in most cases): non-monetary, no physical substance, and not a financial asset. Subsequent measurement is cost less impairment under IAS 36. Revaluation model is permitted only if an active market exists as defined by IAS 38 (frequent, homogeneous, readily available prices). In practice, many entities do not use revaluation due to market criteria and volatility. Impairment losses are recognized when recoverable amount < carrying amount; subsequent reversals are permitted under IFRS if recoverable amount increases (intangible assets other than goodwill).

• IAS 2 Inventory for broker-traders whose business model is to sell crypto in the ordinary course: measure at fair value less costs to sell, with changes recognized in profit or loss.

Illustrative entries (IFRS — treasury BTC, intangible):Purchase BTC

• Debit: Intangible Asset – Crypto 1,000,000

• Credit: Cash 1,000,000

Impairment at period end to 880,000 recoverable amount

• Debit: Impairment Loss 120,000

• Credit: Intangible Asset – Crypto 120,000

Subsequent reversal to 940,000 recoverable amount (IFRS allows)

• Debit: Intangible Asset – Crypto 60,000

• Credit: Reversal of Impairment (P&L) 60,000

2) Tokenized securities held by investors — IFRS 9.If a token conveys contractual cash flows (interest, principal, dividends) and is equity or debt in substance, apply IFRS 9:

• Debt tokens: classify based on business model and SPPI test (solely payments of principal and interest). Measurement at amortized cost, FVOCI, or FVTPL.

• Equity tokens: FVTPL by default; FVOCI (no recycling) election available for non-trading equity investments.

• Derivatives/DeFi features (conversion, embedded leverage) may trigger FVTPL or bifurcation.

3) Issuers of tokenized securities — IAS 32 / IFRS 9.Tokenization does not change liability vs equity outcomes. An on-chain bond remains a financial liability; an on-chain share remains equity if it meets IAS 32 criteria (e.g., no contractual obligation to deliver cash). Embedded features (calls, conversions, indexation) are assessed under IFRS 9 for separation and measurement.

4) Revenue from mining/staking.Assess whether IFRS 15 applies (contract with a customer). Many mining rewards lack a customer counterparty, leading to recognition as other income when control of the reward is obtained, with the received crypto initially measured per IAS 2 or IAS 38 depending on the entity’s business model.

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Classification and measurement under US GAAP.

1) Plain crypto holdings — ASU 2023-08 (effective 2025 for most calendar reporters).Certain crypto assets (fungible, intangible, not created/issued by the reporting entity or its related parties, and not providing enforceable rights to goods/services) are measured at fair value with changes in net income, with separate presentation of changes due to price vs quantity when practicable. This replaces the historical indefinite-lived intangible at cost less impairment model for in-scope crypto, increasing relevance and eliminating asymmetric write-down accounting.

Entry (US GAAP — BTC at fair value):

• Debit: Crypto Assets (FV) 1,000,000

• Credit: Cash 1,000,000

Period-end FV increase to 1,080,000:

• Debit: Crypto Assets (FV) 80,000

• Credit: Unrealized Gain on Crypto (P&L) 80,000

2) Tokenized securities held by investors.

• Equity tokens (ownership interests): ASC 321 (equity securities) → fair value through net income unless practicability exceptions apply.

• Debt tokens: ASC 320 (HTM/AFS/Trading) with CECL (ASC 326) for expected credit losses on HTM/AFS (AFS uses allowance for credit losses limited to amortized cost basis).

• Derivatives or embedded features: ASC 815 governs bifurcation and fair value.

3) Issuers of tokenized securities.Economic substance prevails: an on-chain bond is debt under ASC 480/470; conversion and other features evaluated under ASC 815 (derivative scope) and ASC 470-20 (convertibles). Tokenization does not alter liability/equity classification.

4) Custody and safeguarding considerations.Entities safeguarding crypto for others may recognize a safeguarding liability with a corresponding asset, and provide risk disclosures (legal ownership, technology, concentration, insurance). Presentation follows registrant guidance and policy elections consistent with ASC 405/860 and related SEC interpretive materials.

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Comparative table: IFRS vs US GAAP.

Aspect	IFRS	US GAAP
Plain crypto holdings	IAS 38 (intangible at cost less impairment) unless broker-trader (IAS 2 at FVLCTS). Revaluation model possible only with IAS 38 “active market.”	ASU 2023-08: fair value through net income for in-scope crypto; supersedes prior indefinite-lived intangible model.
Reversal of impairment	Allowed for intangibles (other than goodwill).	Not applicable for FV model; changes flow through P&L each period.
Tokenized equity (investor)	IFRS 9: FVTPL (default) or FVOCI (no recycling) election.	ASC 321: FVTNI (fair value through net income).
Tokenized debt (investor)	IFRS 9: Amortized cost/FVOCI/FVTPL based on business model + SPPI.	ASC 320: HTM/AFS/Trading with CECL (ASC 326) for credit losses.
Issuer accounting (tokenized notes/shares)	IAS 32/IFRS 9: substance over form; tokenization doesn’t change classification.	ASC 470/480/815: same outcomes as non-tokenized instruments.
Broker-traders	IAS 2 at FVLCTS through P&L.	Inventory models generally not used; traders typically carry at fair value via specialized guidance/ASC 820.
Disclosure emphasis	Fair value hierarchy (IFRS 13), liquidity/volatility, custody risks, impairment methodology.	FV hierarchy (ASC 820), price/quantity effects for crypto, risk concentrations, safeguarding arrangements.

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Presentation and disclosures.

IFRS:

• Present crypto within intangible assets (non-current) unless intended for sale in the operating cycle (current). Broker-trader holdings appear as inventory at FVLCTS.

• Disclose valuation techniques, active market assessment (if revaluation used), and impairment testing assumptions. For tokenized securities, apply IFRS 7 risk disclosures and IFRS 13 hierarchy.

US GAAP:

• Present crypto measured at fair value with gains/losses in net income. Provide ASC 820 hierarchy, describe pricing sources, and where feasible, isolate quantity vs price effects on period changes.

• For tokenized debt/equity, provide standard investment or debt security disclosures (classification, CECL, maturities). For custodians, disclose safeguarding risks and arrangements.

Example presentation (holder – US GAAP):

Assets	Amount (USD)
Current Assets:
Cash and Cash Equivalents	3,100,000
Crypto Assets (Fair Value)	1,080,000
Trading Securities (Equity Tokens)	2,450,000
Non-Current Assets:
Property, Plant, and Equipment	6,700,000

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Journal entries for common scenarios.

1) IFRS broker-trader remeasurement (BTC at FVLCTS):

• Debit: Inventory – Crypto (FVLCTS) xxx

• Credit: Trading Income – Crypto xxx

2) IFRS tokenized bond at amortized cost (SPPI met):Purchase at discount

• Debit: Debt Investment – Tokenized Bond 4,900,000

• Credit: Cash 4,900,000

Effective interest accrual

• Debit: Interest Receivable 147,000

• Credit: Interest Income 147,000

3) US GAAP tokenized equity at FVTNI:

• Debit: Equity Securities – Tokenized 2,450,000

• Credit: Unrealized Gain (P&L) 2,450,000

4) US GAAP crypto staking rewards received (non-barter):

• Debit: Crypto Assets (FV) 35,000

• Credit: Other Income – Network Rewards 35,000

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Impact on financial performance and analysis.

Under IFRS, crypto carried as an intangible can create asymmetry—impairment losses hit profit, while subsequent recoveries may be constrained by model and market evidence; broker-trader treatment eliminates asymmetry via FVLCTS. Under US GAAP’s fair value model, crypto holdings produce P&L volatility each period; analysts separate price movement from operating drivers.

For tokenized securities, performance mirrors traditional instruments: effective interest for amortized-cost debt, FV through P&L/OCI per classification, and credit loss expectations for debt under CECL. Disclosures on fair value hierarchy and custody risk help users gauge model reliance and operational exposure.

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Operational considerations.

Policies must clearly define classification logic (crypto vs financial instrument), valuation sources (principal markets, pricing services, DCF models), wallet controls/custody, and impairment or fair value procedures. Smart-contract terms for tokenized securities (coupon, conversion, waterfall, governance) should be archived off-chain and reconciled to legal documentation. Finance, risk, and IT should coordinate on key controls: private-key management, access segregation, and chain-fork/airdrop handling.

Robust documentation and consistent disclosures ensure that blockchain-based assets are reported with the same discipline and comparability as traditional instruments.

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