FASB Accounting Standards Update 2023-08 did two things: it changed how in-scope crypto assets are measured-to fair value through net income-and it expanded what companies must tell investors about those holdings. The disclosure package in Subtopic 350-60 is what lets a reader see not just a single fair value number but the composition of the position, how it changed over the period, and the conventions behind the reported gains and losses. For anyone reading a crypto-holding company's financial statements, these disclosures are where the detail lives.

The standard splits the requirements between interim and annual periods. For each reporting period, including interim periods, an entity must disclose holding-level detail. The Update sets it out directly.

"The name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of the crypto asset holdings that are not individually significant."- FASB, ASU 2023-08, source

Holding-level and restriction disclosures

The per-holding disclosure forces granularity. A company cannot simply report "digital assets: fair value X." For each significant holding-bitcoin, ether, or another in-scope token-it must give the asset's name, its cost basis, its fair value, and the number of units held, with smaller holdings aggregated. That lets a reader compute the embedded gain or loss (fair value minus cost basis) per asset and gauge concentration.

The Update adds a specific disclosure for assets the company cannot freely sell. For crypto assets subject to contractual sale restrictions, an entity must disclose the fair value of those restricted assets, the nature and remaining duration of the restriction, and the circumstances that could cause the restriction to lapse. That requirement matters for tokens received with lock-ups or vesting conditions, where reported fair value may overstate near-term realizable value.

The annual reconciliation and cost-basis method

At annual reporting periods, the disclosure burden steps up. The entity must disclose the method used to determine its cost basis for computing gains and losses-the Update lists first-in, first-out; specific identification; average cost; or another method-and, if gains and losses are not presented as a separate income-statement line, the line item in which they are reported. The choice of cost-basis method is not cosmetic: in a portfolio acquired at different prices over time, first-in, first-out and specific identification can produce different realized gains and losses on the same sale, so disclosing the method is what makes the reported figures interpretable.

The centerpiece of the annual package is a reconciliation, sometimes called a rollforward. Subtopic 350-60-50-3 requires an entity to provide, in the aggregate, a reconciliation of activity from the opening to the closing balances of crypto assets, separately disclosing additions, dispositions, gains included in net income for the period, and losses included in net income for the period. The Update specifies that gains and losses in the rollforward are determined on a crypto-asset-by-crypto-asset basis, so a holding with a net gain is reflected in the gains line and one with a net loss in the losses line, rather than netting across the portfolio. That structure lets a reader trace how the closing fair value was reached: how much was bought, how much was sold, and how much of the change was remeasurement.

Two caveats frame how to use these disclosures. First, the holding-level and restriction disclosures apply each period, while the cost-basis-method disclosure and the activity reconciliation are annual requirements, so an interim filing shows less of the picture than a year-end one. Second, the disclosures describe in-scope crypto assets only; assets outside Subtopic 350-60 carry their own disclosure requirements. What the subtopic delivers, on its terms, is a standardized window into the size, composition, movement, and accounting conventions of a company's qualifying crypto position.

Why these specific disclosures were chosen

Each disclosure element answers a question investors raised about the prior model. The name-and-units detail addresses concentration: a reader can tell whether a reported crypto balance is one large bitcoin position or a spread across several tokens, which matters for assessing how the holding will behave as prices move. Pairing cost basis with fair value for each holding exposes the embedded, unrealized gain or loss-the gap between what the company paid and what the asset is worth-which the old cost-less-impairment model could leave invisible whenever a holding sat below cost with no permitted write-up. The contractual-sale-restriction disclosure flags holdings whose quoted fair value may not be immediately realizable, a distinction that pure price data would miss.

The annual reconciliation does the heaviest analytical work. By separating additions, dispositions, and remeasurement gains and losses, it lets a reader decompose the period's change in crypto value into how much came from buying and selling versus how much came from price movement on assets the company already held. That decomposition is what distinguishes a company actively building a position from one whose balance simply rode the market. The requirement that gains and losses in the rollforward be computed asset by asset, rather than netted, prevents a large gain on one token from masking a large loss on another-so the gains and losses lines reflect the true gross activity rather than a single net figure.

The cost-basis-method disclosure ties the realized figures back to a convention. Because a company that bought the same token at different prices over time will compute different realized gains and losses depending on whether it uses first-in, first-out, specific identification, or average cost, disclosing the method is what lets a reader compare results across companies and across periods on a consistent footing. Taken together, the Subtopic 350-60 disclosures are designed so that the single fair value number on the balance sheet is supported by enough structure-composition, embedded gains, restrictions, activity, and method-for an investor to understand how it was built and how it moved.