Is your company handling cryptocurrency as part of its capital? Here’s what you need to know about regulation, accounting and disclosures.
A cryptoasset treasury strategy involves the allocation of a proportion of a company’s capital to digital assets. The concept is widely accepted to have been pioneered by Strategy Inc (formerly MicroStrategy Inc) in 2020.
Bitcoin (BTC) and other digital assets are added to the balance sheet, with the expectation of capital appreciation and inflation hedging. In doing so, the company also demonstrates innovation in adopting emerging technologies.
BTC treasury strategies have seen a recent surge in popularity. According to bitcointreasuries.net, publicly listed US and UK companies hold over 950,000 and 4,000 BTC respectively.
Often, companies implementing a treasury policy have no previous involvement in the crypto space, and BTC is acquired through equity issues, convertible debt and cash reserves.
Companies that have adopted such a policy regularly trade at a premium to their treasury value. This reflects investor sentiment for exposure to crypto on traditional markets, and the ability of publicly traded entities to access credit markets to accumulate more reserves.
What regulation is there for cryptoassets?
The regulatory environment is still evolving, and it’s difficult to keep pace with new technologies in the crypto industry. Examples include decentralised finance (DeFi), initial coin offerings (ICOs), crypto derivatives and exchange technology.
The FCA has not released any regulatory framework for cryptoasset treasuries. But it has published a ‘crypto roadmap’, discussion papers and draft documents. A full regulatory regime is expected in 2026. This doesn’t affect current legislation, such as disclosure obligations under the LSE listing rules, the financial promotions regime, AML obligations and market abuse regulation.
AQSE has released a formal framework for issuers pursuing cryptocurrency strategies. Effective from 1 September 2025, the framework aims to guarantee market integrity and appropriate investor disclosure. It outlines steps that must be taken by companies to ensure their legal compliance, and establishes a basis for permitted cryptocurrencies approved for treasury policies.
The framework highlights the financial reporting requirements to provide transparency to investors:
- Disclose the treasury policy
- Define and disclose the valuation methodology
- Disclose the performance of the holdings and policy
- Disclose a statement on associated risk in all shareholder communications
NASDAQ has issued a cryptocurrency regulation guide which aims to formalise and legitimise crypto treasury strategies rather than restrict them. It focuses on investor transparency and board governance.
But following the surge of corporate crypto adoption it has tightened the rules. These include minimum float and capital requirements for new firms entering the market. There is also a requirement to obtain shareholder approval before issuing new shares to fund crypto purchases. These rules intend to protect investors from dilution and ensure transparency in capital deployment.
What is the accounting process?
Much like the regulation, the accounting treatment for crypto has not yet reached a consensus around the globe.
Under IFRS, as there is no direct policy for crypto holdings, it is up to the company to apply its own using the existing accounting framework. In 2019, an IFRS interpretations committee considered IAS 38: Intangible Assets to be the most appropriate basis in most scenarios.
IAS 38 allows the cost model (where the carrying value is cost less impairment), or the revaluation model (where the carrying value is remeasured on a regular basis, with movements going through ‘other comprehensive income’).
Companies have mostly applied the revaluation model because it depicts a true and fair value of the assets, and the cryptoassets are tradeable on an active market.
This deviates from the accounting under US GAAP, for which the FASB issued guidance in ASU 2023-08 (effective for fiscal years beginning after 15 December 2024). Whilst cryptoassets will also fall under the definition of intangible assets, any changes in fair value are included in ‘profit and loss’.
The table below highlights these key differences:
|
IFRS* |
US GAAP |
|---|---|---|
Classification |
Intangible asset |
Intangible asset |
Measurement |
FVTOCI |
FVTPL |
Increases in value |
Recognised in OCI |
Profit and loss |
Decreases in value |
Recognised in OCI, to the extent that it offsets the surplus. Any decreases above the surplus are taken to profit and loss. |
Profit and loss |
What should companies disclose?
When companies report on crypto treasury, they must align with the principles of the relevant accounting standards and listing rules. The list below combines mandatory and recommended disclosures. They aim to maximise transparency to shareholders and help in the publication of an annual report which is deemed to be ‘true and fair’:
- Clear and concise cryptoasset treasury policy
- Appropriate accounting policy and valuation methodology
- Disclosure of the significant estimates and judgements involved
- Sufficient disclosure notes to reconcile acquisitions, disposals and fair value changes
- Disclosure of risks associated with the holding of cryptoassets
- Implementation of sufficient governance surrounding the policy, and relevant disclosures
- Consideration of market abuse and transparency rules around material movements in crypto holdings
How can we help?
Transaction services
Our experts have provided reporting accountant services to crypto- related companies listing on AQSE, LSE, AIM and NASDAQ. We can support you in your path to a listing.
Audit
The key audit risks for crypto treasuries are existence, rights & obligations, valuation, and presentation & disclosure. Our experts are well versed in the complexities of crypto and are on hand for statutory and special purpose audits.
Advisory
Our specialist teams can help you to navigate the intricacies of cryptoasset treasury, for example in formulating policies, accounting treatment, best practice governance and disclosure requirements.
For more information, please contact James Savage or Nick Joel.
