As intangible assets, most crypto assets are accounted for as ‘other investments’ under ASC 946-325. Staking those assets brings incremental considerations. Our executive summary explains.
- Investment companies subject to ASC 946 that invest in crypto assets.
- There is no specific US GAAP on crypto assets, for investment companies or otherwise.
- Most crypto assets meet the definition of an intangible asset, and are therefore accounted for as ‘other investments’ and measured at fair value on a recurring basis under ASC 946-325.
- Investment companies need to consider the impact that mining or staking activities could have on their classification as an investment company under ASC 946.
- Staking income generally meets the definition of ‘revenue’ and is accounted for under ASC 606 as a component of investment income.
- Staked crypto assets are generally not derecognized while staked.
- Sales of crypto assets generally follow ASC 610-20 (for crypto intangible assets) or ASC 860-20 (for crypto assets that meet the definition of a financial asset).
- Determining the cost of sold crypto assets should follow the investment company’s specific identification or average cost method policy election for sales of securities under ASC 946-320. If an investment company does not have an accounting policy under ASC 946-320, it can elect either method by analogy to ASC 946-320.