ASU 2023-08 and SAB 122: What Enterprise Finance Teams Need to Change in Crypto Reporting

That treatment made financial statements harder to explain, especially for companies with meaningful crypto holdings. A treasury position could recover economically while the balance sheet still reflected an older impairment-driven carrying value.

FASB’s ASU 2023-08 changed that for qualifying crypto assets. The SEC’s SAB 122 changed the accounting landscape for entities safeguarding crypto assets for others by rescinding SAB 121.

For enterprise finance teams, these updates affect reporting, controls, KPIs, investor communication and system design. Companies that hold, safeguard, transact or report digital assets need cleaner data, clearer policies and stronger reconciliation between on-chain activity and the general ledger.

That is where purpose-built accounting software for cryptocurrency becomes part of the finance infrastructure. The software does not replace accounting judgment, but it gives teams the transaction data, valuation support and audit trail needed to apply that judgment consistently.

What changed under ASU 2023-08?

ASU 2023-08, formally titled Accounting for and Disclosure of Crypto Assets, introduced fair value measurement for certain crypto assets under U.S. GAAP.

Before this update, many crypto assets were accounted for as indefinite-lived intangible assets. That model created three problems for enterprise reporting:

1. Downward movements were reflected through impairment.
2. Upward recoveries were not reflected in the carrying value.
3. The financial statements could drift away from the economic value of the company’s crypto holdings.

Under FASB’s ASU 2023-08, in-scope crypto assets are measured at fair value each reporting period, with changes recognized in net income. The amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted.

For CFOs and controllers, the practical impact is clear: qualifying crypto holdings can now create recurring profit and loss volatility.

That volatility is not an accounting error. It is the result of fair value measurement.

ASU 2023-08 does not apply to every digital asset

This point matters.

ASU 2023-08 applies to certain crypto assets that meet specific criteria. The standard does not automatically cover every token, NFT, stablecoin, wrapped asset, internally issued token or DeFi-related position.

Enterprise finance teams should avoid treating “crypto asset” as one accounting bucket.

A company may hold:

• Bitcoin
• Ether
• Stablecoins
• Governance tokens
• Utility tokens
• NFTs
• Wrapped assets
• LP tokens
• Staked assets
• Internally issued tokens
• Customer assets held in custody
• Protocol rewards
• Tokenized real-world assets

Some may fall within ASU 2023-08. Others may require different accounting treatment.

The first enterprise task is scope assessment. Finance teams need to map each asset type to the appropriate accounting treatment, document the conclusion and review that conclusion when the asset’s rights, use or structure changes.

What changed with SAB 121 and SAB 122?

SAB 121 was issued by the SEC in 2022. It required entities that safeguarded crypto assets for platform users to recognize a liability and corresponding asset related to the obligation to safeguard those crypto assets.

That treatment created major balance sheet implications for entities providing crypto custody or similar safeguarding services. Assets held for customers could affect the entity’s reported assets and liabilities, even though the company did not own those customer assets economically.

In January 2025, the SEC issued Staff Accounting Bulletin No. 122, which rescinded the interpretive guidance from SAB 121. SAB 122 states that entities with an obligation to safeguard crypto assets for others should determine whether to recognize a liability related to risk of loss by applying existing contingency guidance, such as ASC 450-20 under U.S. GAAP or IAS 37 under IFRS.

This does not mean custody obligations disappear from reporting.

It means companies must apply the relevant liability, contingency and disclosure frameworks instead of following SAB 121’s previous asset-and-liability recognition model.

The SEC also reminds entities to continue providing disclosures that help investors understand obligations to safeguard crypto assets held for others.

Why this matters for enterprise financial statements

These updates affect more than the accounting footnotes.

They can change how crypto activity appears across the balance sheet, income statement and disclosures.

Balance sheet

ASU 2023-08 can bring the carrying value of in-scope crypto assets closer to current market value. That improves visibility but introduces more period-to-period movement.

SAB 122 can reduce the balance sheet impact for companies that previously recognized safeguarding assets and liabilities under SAB 121, depending on their facts and the liability analysis under applicable accounting standards.

For custodians, exchanges, fintechs and platforms, this can affect reported leverage, asset totals and balance sheet presentation.

Income statement

Fair value changes under ASU 2023-08 run through net income for qualifying assets. That means crypto price movement can affect reported earnings.

A company with significant BTC or ETH holdings may report stronger earnings in one quarter and weaker earnings in the next, even if its core operating performance did not change.

Finance teams need to explain that distinction clearly.

Cash flow statement

Fair value changes do not automatically mean cash moved. This can create confusion for executives, boards and investors.

If net income changes because of fair value movement, finance teams need to separate non-cash fair value changes from operating cash performance in internal reporting and investor materials.

Disclosures

Both ASU 2023-08 and SAB 122 increase the need for clear disclosure.

Companies should explain:

• Which digital assets they hold
• Which assets fall within ASU 2023-08
• How fair value is determined
• Which pricing sources are used
• How restrictions or lockups affect measurement
• Whether assets are held for customers
• What safeguarding obligations exist
• Which risks could affect loss exposure
• How management reviews valuation and custody controls

The accounting update creates a reporting obligation. The disclosure obligation is what makes the reporting understandable.

How these changes affect enterprise KPIs

Fair value accounting can distort KPIs if the finance team does not adjust reporting definitions.

For example, a company may track:

• EBITDA
• Net income
• Operating margin
• Treasury performance
• Asset coverage
• Working capital
• Debt covenants
• Runway
• Revenue growth
• Gross margin
• Customer assets under custody

Crypto fair value gains and losses may affect some of these metrics directly or indirectly.

The company should decide which KPIs include crypto fair value movements and which ones exclude them for operating analysis.

For external reporting, GAAP numbers remain GAAP numbers. Internally, management may need additional views:

The goal is not to hide volatility. The goal is to explain it.

Investor communication needs to change

Investors do not want surprises in financial statements.

If fair value changes create a large swing in earnings, management should be ready to explain the source of the movement. Was it driven by treasury holdings? Customer asset exposure? Token rewards? Trading activity? DeFi positions? A change in valuation source?

The investor message should separate operating performance from crypto asset remeasurement.

A simple structure helps:

1. What changed in the accounting treatment?
2. Which assets are affected?
3. How large was the impact?
4. Was the movement realized or unrealized?
5. How does management monitor volatility?
6. What controls support the valuation?
7. What should investors expect in future periods?

This is especially important for public companies, companies preparing for audit, companies raising capital and enterprises with board-level reporting obligations.

The operational problem: crypto data is not naturally accounting-ready

ASU 2023-08 and SAB 122 both depend on accurate data.

That creates an operational challenge.

Blockchain data is transparent, but raw blockchain data is not the same as accounting data. A transaction hash does not explain whether an activity was a purchase, sale, internal transfer, reward, fee, bridge, staking event, customer custody movement or treasury rebalancing.

Finance teams need to connect the following layers:

• Wallet and exchange activity
• Asset ownership
• Entity ownership
• Transaction purpose
• Cost basis
• Fair value
• Classification
• Journal entries
• Disclosures
• Controls
• Audit evidence

If these layers sit in spreadsheets, the close process becomes fragile. If they sit in separate systems, reconciliation becomes slow. If they are not documented, audit readiness suffers.

What enterprise finance teams should do now

1. Create a digital asset inventory

Start with a complete inventory of digital assets held, used, safeguarded or issued by the company.

The inventory should include:

• Asset name
• Token symbol
• Chain
• Wallet or custodian location
• Owning entity
• Business purpose
• Whether the asset is company-owned or customer-owned
• Whether the asset may fall within ASU 2023-08
• Whether restrictions, lockups or contractual rights exist
• Valuation source
• Accounting treatment
• Disclosure considerations

This inventory becomes the foundation for accounting policy, reconciliation and reporting.

2. Perform a scope assessment under ASU 2023-08

Do not assume every asset qualifies for fair value treatment under the new standard.

Each asset should be reviewed against the ASU 2023-08 criteria. The conclusion should be documented. The documentation should explain why the asset is in scope or out of scope.

This is especially important for stablecoins, NFTs, wrapped assets, LP tokens, internally issued tokens and assets with contractual rights or claims.

3. Review custody and safeguarding obligations

Any company that safeguards crypto assets for customers should revisit its accounting analysis after SAB 122.

The review should answer:

• What assets are held for customers?
• What legal obligations does the company have?
• What loss exposure exists?
• Does a liability need to be recognized under ASC 450-20 or IAS 37?
• What disclosures are required?
• What controls support custody and access?
• How are customer assets separated from company assets?

SAB 122 removed SAB 121’s prior model, but it did not remove the need for judgment, controls or disclosure.

4. Define fair value policies

A fair value policy should state which price sources are used, how prices are selected and how exceptions are handled.

The policy should cover:

• Primary pricing source
• Backup pricing source
• Time of measurement
• Exchange selection
• Volume thresholds
• Treatment of illiquid assets
• Treatment of restricted assets
• Manual override procedures
• Review and approval process
• Documentation retained for audit

For enterprises, fair value is a governance issue. The finance team should be able to explain why a price was used, who reviewed it and how the company would respond if the price source became unreliable.

5. Update management reporting

Management reporting should separate operating activity from fair value movement.

This is especially useful for companies with material crypto treasury positions.

A quarterly management report may include:

• Opening crypto balances
• Additions
• Disposals
• Transfers
• Realized gains/losses
• Unrealized fair value changes
• Ending balances
• Asset-level exposure
• Entity-level exposure
• Custody obligations
• Valuation exceptions
• Control exceptions

This gives executives and board members a clearer view of performance and risk.

6. Reconcile crypto activity to the ERP

Crypto activity should flow into the company’s ERP or general ledger with reviewable journal entries.

A strong process reconciles:

• Wallet balances to blockchain data
• Exchange balances to exchange statements
• Custody balances to custodian reports
• Asset quantities by wallet
• Asset quantities by entity
• USD values by reporting period
• Fair value changes by asset
• Customer assets held in custody
• Company-owned assets
• Journal entries posted to the general ledger

The accounting team should not discover reconciliation gaps at year-end.

7. Prepare audit evidence throughout the period

Audit evidence should be created during the close process, not rebuilt months later.

Finance teams should retain:

• Transaction hashes
• Wallet ownership records
• Custodian statements
• Pricing source evidence
• Fair value calculations
• Scope assessment memos
• Custody obligation analysis
• Journal entry support
• Reconciliation reports
• Approval records
• Disclosure support

This reduces audit friction and helps the company explain its accounting treatment with confidence.

Common mistakes to avoid

Treating every token the same

A stablecoin, NFT, governance token and BTC holding may require different treatment. Grouping them together creates reporting risk.

Ignoring unrealized volatility

Fair value movement can affect net income. Management needs a process for explaining that movement before investors ask.

Treating SAB 122 as the end of custody accounting

SAB 122 rescinded SAB 121, but safeguarding obligations may still require liability analysis and disclosure.

Relying on screenshots

Screenshots are weak audit evidence. Finance teams need reproducible transaction records, pricing support and reconciliations.

Keeping crypto outside the ERP

A separate spreadsheet may work during early experimentation. It does not support enterprise reporting at scale.

Final thoughts

ASU 2023-08 and SAB 122 changed the accounting conversation around digital assets.

ASU 2023-08 gives companies a fair value model for qualifying crypto assets. SAB 122 removes SAB 121’s prior safeguarding model and sends companies back to existing liability and disclosure frameworks for custody obligations.

For enterprise finance teams, the practical work is bigger than reading the standards.

They need asset-level scope assessments, fair value policies, custody obligation analysis, ERP reconciliation, KPI adjustments and investor-ready explanations.

The companies that handle this well will treat crypto accounting as part of financial infrastructure. The companies that delay will keep fighting the same problems every close: incomplete records, unclear classifications, valuation questions, audit requests and investor confusion.