Who is this research for? Corporate accountants, auditors, financial analysts, regulators, and business executives seeking clarity on cryptocurrency reporting and its implications for transparency and market behavior.
Executive Summary
This study, co-authored by Jonathan Shipman of the Sam M. Walton College of Business, University of Arkansas (Department of Accounting), analyzes how U.S. public firms reported cryptocurrency holdings between 2013 and 2022, focusing on the transitional period leading up to ASU 2023-08.
Three key patterns emerge:
- Firms treated cryptocurrencies like investment assets rather than indefinite-lived intangibles—prefiguring the requirement of the fair-value model.
- Audit firms appear to influence firms’ crypto reporting choices, with Big 4 clients more likely to apply conservative impairment models and minimal disclosures.
- When crypto markets become more liquid, firms are more likely to adopt fair-value accounting models and make more detailed disclosures.
While the fair-value approach promises enhanced relevance and comparability, the authors caution that it may also introduce heightened earnings and stock-return volatility without necessarily improving the informativeness of disclosed earnings.
Action Items for Industry
- Prepare for expanded disclosure: Firms should align crypto-asset reporting with ASU 2023-08, ensuring fair-value measurement and appropriate income-statement presentation.
- Model and communicate volatility: Financial executives can consider developing scenarios for fair-value-driven volatility and effectively communicate this to analysts and investors.
- Leverage market liquidity: Firms with actively traded crypto holdings should use observable pricing to enhance measurement accuracy and comparability—while firms with illiquid tokens should establish amplitude-sensitive models.
Quote from the Researcher
“Our study provides the first comprehensive evidence on how U.S. firms accounted for crypto before ASU 2023-08, revealing significant growth, inconsistent accounting and disclosure practices, and a disconnect between firms’ investment-like view of crypto and impairment-driven accounting firm and AICPA interpretive guidance. Our findings help clarify why the fair value model is a better conceptual fit and highlight why valuation and liquidity challenges will likely continue to shape crypto reporting.”
-Jonathan Shipman
Co-Authors & Affiliations
• Chelsea M. Anderson — University of Cincinnati, Carl H. Lindner College of Business
• Vivian W. Fang — Indiana University, Kelley School of Business
• James R. Moon, Jr. — Georgia Institute of Technology, Scheller College of Business
Link to the Original Research
Published in the Journal of Accounting Research here.
📩 Interested in learning more?
If you’d like additional information about this research or to connect directly with
the researchers, please email us at research@walton.uark.edu.
