TL;DR: FASB ASU 23-08 ended the accounting penalty for holding Bitcoin. Starting January 2025, companies report Bitcoin at fair value-recognizing both gains AND losses. The old impairment-only model is gone, removing a major barrier to corporate adoption.
For years, Bitcoin on a corporate balance sheet was a one-way street: you could recognize losses when the price dropped, but you couldn’t book gains when it soared. That asymmetry ended on January 1, 2025.
FASB’s new Accounting Standards Update (ASU 23-08) now requires fair value accounting for Bitcoin and certain crypto assets. The change is already reshaping how public companies report their holdings-and may accelerate corporate adoption.
Here’s what CFOs and finance teams need to know.
Key Takeaways
| What Changed | Old Rules (Pre-2025) | New Rules (ASU 23-08) |
|---|---|---|
| Classification | Indefinite-lived intangible asset | Separate line item at fair value |
| Gains | Never recognized (until sale) | Recognized quarterly |
| Losses | Permanent impairment | Recognized quarterly |
| Reporting | Historical cost minus impairments | Mark-to-market each quarter |
| Effective Date | - | Fiscal years after Dec 15, 2024 |
What Changed in January 2025?
The Financial Accounting Standards Board (FASB) published ASU 23-08 in December 2023, with mandatory adoption for fiscal years beginning after December 15, 2024. For calendar-year companies, that means Q1 2025 filings reflect the new rules.
The Old Treatment: Impairment-Only
Under previous GAAP, Bitcoin was classified as an indefinite-lived intangible asset. Companies recorded it at cost and tested for impairment. If Bitcoin’s price dropped below your purchase price at any point during the quarter, you recognized that loss-permanently.
But here’s the catch: if the price recovered, you couldn’t write it back up. The impairment was locked in.
Example: A company buys 100 BTC at $50,000. Price drops to $30,000 mid-quarter, then recovers to $60,000 by quarter-end. Under old rules, they’d report a $2M loss-even though they’re sitting on a $1M gain.
This created absurd situations where companies like MicroStrategy reported billions in impairment losses while their Bitcoin had actually appreciated significantly from their cost basis.
The New Treatment: Fair Value Through Net Income
ASU 23-08 flips this model. Bitcoin is now measured at fair value each reporting period, with changes flowing through net income. Gains count. Losses count. The balance sheet reflects actual market value.
- Mark-to-market at each quarter-end
- Gains AND losses hit the income statement
- Separate line item on the balance sheet (not buried in intangibles)
- Enhanced disclosure requirements
How Fair Value Accounting Works for Bitcoin
Fair value accounting for Bitcoin means companies report holdings at current market price each quarter. This creates earnings volatility-but also transparency. Investors see the real value, not a historical cost that may be years out of date.
Quarterly Reporting Impact
Every quarter, companies must:
- Determine fair value using Level 1 inputs (quoted prices in active markets)
- Recognize the change from prior period in net income
- Present crypto assets separately from other intangible assets
- Disclose significant holdings, cost basis, and any restrictions
The Volatility Trade-Off
Bitcoin’s volatility now flows directly into earnings. A 20% price swing in a quarter means a 20% swing in the reported value of holdings-hitting net income.
| BTC Price Move | Impact on $100M Holdings | Net Income Effect |
|---|---|---|
| +20% quarter | +$20M fair value | +$20M (pre-tax) |
| -20% quarter | -$20M fair value | -$20M (pre-tax) |
| Flat quarter | No change | No impact |
For some CFOs, this is a feature: the balance sheet finally reflects reality. For others, it’s a concern: analysts and boards may struggle with quarter-to-quarter swings that have nothing to do with operations.
“Investors should focus on BTC holdings and cost basis, not quarterly mark-to-market swings.”
MicroStrategy Investor Relations guidance on Bitcoin treasury reporting
Why This Matters for Corporate Adoption
The old accounting treatment was widely cited as an impediment to corporate Bitcoin adoption. CFOs didn’t want to explain why they were booking losses on an asset that had actually appreciated.
“FASB’s updated fair value accounting treatment eliminates a major impediment to corporate adoption of Bitcoin as a treasury asset.”
Michael Saylor, Executive Chairman, MicroStrategy
The Saylor Effect
MicroStrategy lobbied for this change for years. Saylor argued the impairment-only model understated the company’s Bitcoin position and confused investors. With fair value accounting, MicroStrategy’s financials will better reflect its $60+ billion Bitcoin treasury.
Fair value accounting is coming to #Bitcoin. This upgrade to FASB accounting rules eliminates a major impediment to corporate adoption of $BTC as a treasury asset. https://t.co/MjVzUJRVjX
— Michael Saylor (@saylor) September 6, 2023
Opening the Door for New Entrants
Companies that previously avoided Bitcoin due to accounting complexity now have a clearer path. The new rules:
- Align with how most executives think about Bitcoin (as a market-priced asset)
- Reduce the “accounting penalty” for holding through volatility
- Make Bitcoin treasury strategies easier to explain to boards and investors
See which companies have already adopted Bitcoin treasury strategies on our leaderboard.
Implementation: What Companies Are Doing
Based on our analysis of early 2025 filings, companies are taking different approaches to the transition:
Modified Retrospective Adoption
Most companies are using modified retrospective transition-recording a cumulative adjustment to retained earnings at the start of 2025 rather than restating prior periods. This is simpler and FASB’s recommended approach.
Disclosure Enhancements
Companies must now disclose:
- Significant crypto holdings by type
- Cost basis and fair value
- Contractual sale restrictions
- Changes during the reporting period
Presentation Changes
Bitcoin moves out of “intangible assets” into its own line item. This improves visibility for investors analyzing crypto exposure.
| Disclosure Requirement | What to Include |
|---|---|
| Holdings by type | Bitcoin, Ethereum, etc. separately |
| Cost basis | Original purchase price |
| Fair value | Current market value |
| Restrictions | Any contractual limitations |
| Changes | Purchases, sales, gains/losses |
What This Means for Your Bitcoin Treasury Decision
The accounting barrier to corporate Bitcoin is gone. Fair value accounting aligns financial reporting with economic reality-your balance sheet shows what your Bitcoin is actually worth.
The trade-off is volatility. Quarterly earnings will swing with Bitcoin’s price. For companies with strong conviction and long time horizons, that’s acceptable. For those sensitive to earnings volatility, it’s a factor to model carefully.
Bottom line: If accounting complexity was your reason not to hold Bitcoin, that reason no longer exists.
Further Reading
- How to Verify Company Bitcoin Holdings On-Chain: Independent verification guide
- Bitcoin Treasury Companies with Proof of Reserves: Who can prove their holdings
Track which companies hold Bitcoin and how much at BitcoinCompanies.co.