INSIGHT

The guide to cryptocurrency accounting: What your company needs to know 

Javier Salinas • July 7, 2025

Services: Outsourced Accounting Industries: Blockchain & Digital Assets

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As a crypto company, your business moves at the speed of blockchain. Whether you’re building on distributed ledger technology, launching new tokens, or scaling your digital asset operations, your accounting needs are as dynamic as the industry itself.  

At BPM, we empower you to navigate the complexities of cryptocurrency accounting, so you can focus on growth and innovation. 

Why crypto accounting is different 

Crypto assets—including cryptocurrencies, NFTs, utility tokens, and other distributed ledger-based tokens—are fundamentally different from traditional assets, and that’s why their accounting treatment stands apart. This starts with how crypto assets are classified.  

Crypto classifications as intangible assets  

Under current U.S. Generally Accepted Accounting Principles (GAAP), most crypto assets are classified as intangible assets. This means they are not considered cash, cash equivalents, or financial instruments, and they don’t give you enforceable rights to underlying goods or services.  

Instead, they exist on a blockchain, are secured by cryptography, are fungible, and are not created by the reporting entity or its affiliates. This classification was established because crypto assets don’t fit neatly into existing asset categories like cash or equity securities. But it’s not that simple.  

The shift to fair market value measurement  

Historically, crypto assets were measured using the traditional intangible asset model, which required companies to record them at historical cost and test for impairment. This meant that if the fair value dropped below cost, you had to recognize a loss, but if the value increased, you couldn’t recognize a gain until you sold the asset. This approach often led to financial statements that didn’t reflect the true economic reality of your crypto asset holdings, especially in volatile markets. 

Recognizing these limitations, the Financial Accounting Standards Board (FASB) introduced new guidance (ASU 2023-08) that requires certain crypto assets to be measured at fair value at each reporting period.  

Now, both unrealized gains and losses are recognized in net income, providing a more accurate and timely reflection of your financial position and performance. This is a significant shift from the previous impairment-only model and brings crypto accounting closer to how equity securities are treated under GAAP. So what does this all mean? 

Enhanced disclosure and reporting requirements  

With the new standards, companies must present crypto assets separately from other intangible assets on the balance sheet and provide enhanced disclosures.  

This includes details such as the: 

• Name 
• Cost basis
• Fair value 
• Number of units held for each significant crypto asset 

Plus any information about any contractual sale restrictions and the methods used to determine cost basis. These requirements apply to both annual and interim periods and are designed to increase transparency for investors and other stakeholders. You also have to disclose if >10% of holdings are in a single asset or counterparty  

For crypto-native businesses, these changes mean your accounting systems must be able to track fair value across multiple blockchains and wallets, account for frequent and complex transactions, and manage tax lot tracking for gains and losses. For public companies, segment reporting may apply if crypto activities represent a material business line.  

You also need to address the classification of different types of digital assets, such as stablecoins or utility tokens, which may have unique accounting implications. 

Key accounting challenges for crypto companies 

We now understand how crypto accounting differs from accounting for traditional assets and securities. These differences cause specific challenges crypto companies (and most importantly, their accounting team) need to be highly attuned to.  

Specific asset classification and recognition 

We talked a little bit about this earlier but under FASB’s ASU 2023-08, companies must now classify in-scope crypto assets separately on the balance sheet, distinguishing them from other indefinite-lived intangible assets like trademarks. This requires evaluating: 

• Token type: Utility tokens (access to services) vs. security tokens (regulated financial instruments). 
• Liquidity and market activity: Whether assets qualify for fair value measurement based on active market criteria. 
• Contractual restrictions: Assets with sale limitations may require separate disclosure or valuation adjustments. 

For example, stablecoins pegged to fiat currencies may need different treatment than volatile cryptocurrencies, while NFTs often fall outside FASB’s current scope, requiring judgment under existing guidance. 

Initial measurement and valuation 

Determining fair value is straightforward for widely traded tokens—so-called Level 1 inputs—where active markets provide clear pricing. However, for less liquid or emerging tokens, reliable market data can be scarce. In these cases, companies must turn to Level 2 or Level 3 inputs, such as third-party pricing models or decentralized oracles, which introduces a layer of subjectivity and demands careful documentation. 

Tracking the cost basis for each asset adds another layer of cash flow complexity. Crypto companies often receive assets through mining rewards, airdrops, or hard forks, each requiring precise allocation of acquisition costs across multiple wallets and platforms. Without robust systems in place, it’s easy to lose track of these details, especially as transaction volumes grow. 

Previously, impairment rules resulted in “asymmetric” accounting—losses were recognized promptly, but gains could only be realized upon sale. The move to fair value aims to resolve this imbalance, allowing companies to recognize both unrealized gains and losses as they occur, providing a clearer picture of financial health. 

For assets that lack clear market data, the onus is on the company to rigorously document its valuation methods. Auditors and regulators expect transparent, well-supported methodologies that can stand up to scrutiny, making thorough recordkeeping and policy development essential for every reporting entity. 

Transaction complexity and data integrity 

Every blockchain interaction—from DeFi yield farming to cross-chain swaps—creates audit trails that traditional systems struggle to capture: 

• Multi-chain activity: Transactions across Ethereum, Solana, and layer-2 networks (e.g., Arbitrum) require unified tracking tools. 
• Smart contract interactions: Automated tax lot tracking is critical for staking rewards, liquidity pool entries/exits, and governance voting. 
• Reconciliation gaps: Disparities between exchange APIs, wallet addresses, and on-chain data often lead to manual corrections 

Solutions like blockchain explorers with SOC reports (rare) or purpose-built crypto accounting software are becoming essential. 

Emerging challenges crypto companies should keep an eye on 

Beyond core accounting, crypto-native companies face: 

• Regulatory arbitrage: Divergent global standards (e.g., EU’s MiCA vs. US state-by-state rules) complicate cross-border operations. 
• Proof-of-reserves audits: Exchanges and custodians must cryptographically verify holdings without exposing sensitive wallet data—a process still evolving. 
• DeFi and DAO governance: Decentralized entities blur lines between equity, liabilities, and revenue recognition, especially with token-based voting rights.  

Navigating these challenges requires not only specialized accounting knowledge and adaptable systems, but also a proactive approach to policy development and technology—ensuring your company can confidently manage digital assets, stay compliant, and turn complexity into strategic opportunity. 

Essential accounting capabilities for crypto companies 

As your business grows in the digital asset space, your accounting systems must keep pace with the complexity and speed of your operations.  

When evaluating accounting solutions for your crypto asset holdings, prioritize these essential capabilities: 

Automated transaction tracking 

Manual tracking simply can’t keep up with the volume and velocity of crypto transactions. Look for solutions that: 

• Automatically capture on-chain activity across all your wallets and exchanges 
• Integrate directly with major exchanges and DeFi protocols via APIs 
• Record USD values and fair value at the exact time of each transaction 
• Generate audit-ready transaction logs with business purpose tags 
• Provide a complete, traceable history for every digital asset from initial recognition to final disposition 

Automated tracking not only streamlines your workflow, but also supports accurate financial reporting, comprehensive income calculations, and compliance with enhanced disclosure requirements. 

Multi-chain and protocol support 

Your operations likely span multiple blockchains, layer-2 solutions, and DeFi protocols. Make sure your accounting platform can: 

• Support all chains and digital assets where you hold or transact 
• Track cross-chain transfers and interchain bridge activity 
• Reconcile smart contract interactions and DeFi participation 
• Adapt quickly to new protocols as your business evolves 

This flexibility ensures you can measure assets at fair value and report accurately, no matter how your digital asset strategy grows. 

Tax lot tracking and cost basis management 

Accurate tax lot tracking is critical for calculating gains and losses, managing tax implications, and optimizing your net income. Your system should: 

• Track cost basis for every acquisition, including mining rewards, airdrops, and hard forks 
• Support multiple calculation methods (FIFO, LIFO, specific identification) 
• Calculate realized and unrealized gains/losses for each reporting period 
• Generate tax-ready reports tailored to your jurisdiction and integrate with tax filing tools 

Effective tax lot management also helps you maximize benefits from tax loss harvesting and ensures your financial statements reflect the true performance of your crypto asset class. 

Seamless integration and scalability 

As you’re looking for cryptocurrency accounting software, ensure you prioritize different integrations to help you scale. Choose accounting technology that: 

• Syncs with your general ledger and ERP systems (e.g., QuickBooks, NetSuite, Xero) 
• Scales with your transaction volume and supports new asset types as your business grows 
• Provides robust controls and documentation for audit readiness and regulatory compliance 

Proactive advisory and continuous improvement 

Your accounting partner should do more than implement systems—they should help you: 

• Develop comprehensive accounting policies for digital assets, including fair value measurement and enhanced disclosures 
• Monitor evolving accounting standards and tax regulations 
• Identify opportunities to improve operating cash flows and streamline reporting processes 

By focusing on these capabilities, you empower your team to turn crypto accounting from a compliance challenge into a strategic advantage—supporting transparency, agility, and growth at every stage of your digital asset journey.  

Selecting the right accounting firm for your crypto business 

Choosing an accounting firm for your digital asset operations isn’t just about finding a service provider—it’s about building a strategic alliance that empowers your growth and gives you confidence in every reporting period. Here’s what to look for: 

Specialized knowledge that goes beyond the basics 

Your accounting team should bring more than general experience—they need a deep understanding of blockchain technology, digital assets, and the evolving landscape of crypto assets. Look for a firm that: 

• Understands the technical fundamentals of distributed ledger-based systems and smart contracts 
• Knows how to classify and measure different token types, including utility tokens, security tokens, and stablecoins 
• Stays current with industry-specific regulatory and disclosure requirements and the latest guidance from the Financial Accounting Standards Board (FASB) 
• Advises on DeFi participation, DAO governance, and cross-border compliance challenges 

Ask about their ongoing training, certifications, and commitment to continuous learning in digital asset accounting. You want a team that invests in staying ahead, so you can too. 

Technology infrastructure built for digital assets 

Effective crypto accounting isn’t possible without the right technology. Your accounting firm should offer: 

• Blockchain analytics platforms that capture and reconcile transactions across all your wallets and exchanges 
• Seamless integration with major exchanges, DeFi protocols, and smart contracts 
• Real-time dashboards and robust reporting tools for enhanced disclosures and financial statement accuracy 
• Strong data security and audit trail capabilities to support compliance and transparency 

Ask your prospective firm to demonstrate how their technology stack addresses the unique challenges of crypto asset holdings and provides actionable insights for your business. 

Proactive regulatory awareness and guidance 

With digital asset regulations evolving rapidly, your accounting partner should be your early warning system. Look for a firm that: 

• Monitors developments across all relevant jurisdictions and adapts quickly to new pronouncements 
• Provides proactive guidance on compliance, fair value measurement, and enhanced disclosure requirements 
• Understands reporting obligations for private companies, not-for-profit entities, and investment companies 
• Maintains relationships with regulatory bodies and industry groups 
• Has strong internal controls for crypto transactions  

Staying ahead of regulatory changes is critical for managing risk and seizing new opportunities in the crypto space.  

Experience with crypto audits 

Digital assets receive heightened scrutiny during financial audits, and proactive preparation is essential for building stakeholder trust and reducing audit complexity.  

When you work with an accounting firm that understands the nuances of crypto assets, you can confidently address the unique audit requirements that come with holding digital assets on your balance sheet. 

Together, you should: 

• Document robust ownership verification methods, including cryptographic proof of control over wallets and accounts. 
• Establish clear procedures for valuation documentation, ensuring assets are measured at fair value and supported by reliable data sources. 
• Implement continuous monitoring for impairment and valuation adjustments, so your financial reporting always reflects current market conditions. 
• Develop comprehensive disclosure templates that meet enhanced requirements for crypto asset holdings, contractual restrictions, and fair value methodologies. 
• Maintain audit-ready transaction logs and reconcile on-chain and off-chain data to ensure completeness and accuracy of your digital asset records. 

When you prepare for audit scrutiny in this way, you not only streamline the audit process and reduce costs, but you also provide stakeholders with the confidence that your crypto asset reporting is transparent, accurate, and fully compliant with evolving standards. 

The future of crypto accounting 

The accounting treatment for digital assets continues to evolve. Stay ahead by monitoring these developments: 

• Fair value accounting may replace the current impairment model, allowing for more accurate representation of cryptocurrency holdings. The Financial Accounting Standards Board (FASB) has indicated movement in this direction, which would align accounting treatment more closely with the economic reality of these assets. 
• Specialized disclosure frameworks continue to develop, providing greater transparency around digital asset activities. These frameworks aim to address the unique attributes of cryptocurrency operations that aren’t captured in traditional financial statements. 
• Integrated reporting solutions that combine on-chain data with traditional accounting systems will become increasingly sophisticated, reducing manual reconciliation needs while improving financial visibility. 

Taking your crypto accounting to the next level 

Effective crypto accounting does more than keep you compliant—it helps you make smarter decisions and unlock new opportunities. With the right partner and the right processes, you can turn digital asset complexity into a strategic advantage. 

As one of the early CPA firms to embrace the crypto industry, BPM has spent over 11 years developing deep knowledge and proven methodologies specifically for digital asset businesses. Our extensive experience across market cycles, regulatory changes, and evolving technologies means we understand not just where the industry is today, but where it’s headed—giving you the strategic insight to stay ahead. 

Ready to strengthen your crypto accounting? Contact BPM to discover solutions tailored to your goals.