Crypto impairment under IFRS: write-downs, reversals and the cost cap
Under IAS 38 and IAS 36, crypto written down can be written back up, but never above original cost. US legacy rules allow no write-back at all.
If you report under IFRS and carry crypto at cost, a price fall can force a write-down, and a later recovery lets you reverse some or all of it, but only up to what the asset would have been carried at with no write-down. If you report under US GAAP, crypto outside the fair value standard is still stuck with a one-way model: write-downs stay written down.
Where IFRS puts crypto in the first place
There is still no IFRS standard written for crypto. The governing text remains a June 2019 agenda decision of the IFRS Interpretations Committee. It looked at cryptocurrencies that sit on a distributed ledger, are not issued by any party and create no contract with the holder [3]. The Committee concluded that such holdings are not cash and not financial assets, and that they meet the definition of an intangible asset [3]. IAS 2 inventory accounting applies instead when the crypto is held for sale in the ordinary course of business, and commodity broker-traders may measure that inventory at fair value less costs to sell [3]. Everyone else applies IAS 38 [3].
IAS 38 then offers two models. The usual one is cost: the asset sits at cost less accumulated amortisation and impairment [2]. The alternative is revaluation to fair value, which is allowed only where fair value can be determined by reference to an active market [2]. KPMG notes that deciding whether a token trades with enough frequency and volume to count as an active market is a judgement [5].
When IAS 36 bites
IAS 36 says an asset may not be carried above the amount you could recover from it. Recoverable amount is the higher of fair value less costs of disposal and value in use [1]. You test when there is an indication of impairment, and some assets must be tested every year whether or not there is an indication, including intangible assets with indefinite useful lives [1]. IAS 38 likewise says an indefinite-life intangible is not amortised but is tested for impairment annually [2]. Whether a given token has an indefinite useful life is a judgement your policy should document.
For a liquid token, fair value less costs of disposal is usually the practical measure, because value in use is hard to support for an asset that generates no cash flows on its own. That is a common approach rather than a rule, so record your reasoning.
Reversals, and the cap that limits them
This is where IFRS and US practice part ways. IAS 36 permits most impairment losses to be reversed when circumstances improve, goodwill being the exception [1]. A reversal raises the carrying amount, but never above what the carrying amount would have been had the original loss never been recognised [1]. For a crypto holding on the cost model with no amortisation, that ceiling is simply original cost.
The FASB summarised the contrast itself when it issued ASU 2023-08: impairment testing under IAS 38 is similar to old US GAAP, except that IFRS lets impairment losses be reversed in some circumstances [4].
| Account | Debit | Credit |
|---|---|---|
| Year 1 close: 100 SOL bought for 20,000 fall to 150 each Recoverable amount 100 x 150 = 15,000 (disposal costs assumed immaterial). Impairment = 20,000 - 15,000 = 5,000 | ||
| Impairment loss — crypto (P&L) | 5,000 | |
| Accumulated impairment — crypto | 5,000 | |
| Year 2 close: price recovers to 190 Recoverable 19,000. Increase 4,000; cap headroom 20,000 - 15,000 = 5,000. Reversal = lower of the two = 4,000 | ||
| Accumulated impairment — crypto | 4,000 | |
| Impairment reversal — crypto (P&L) | 4,000 | |
| Year 3 close: price jumps to 260 Recoverable 26,000, but carrying may not exceed 20,000 cost. Remaining reversal = 1,000; the other 6,000 is not recognised | ||
| Accumulated impairment — crypto | 1,000 | |
| Impairment reversal — crypto (P&L) | 1,000 | |
The revaluation alternative
If an active market exists and you elect revaluation, the picture changes. As the FASB described the IFRS model, a revalued intangible is carried at fair value at the revaluation date less later impairment, with fair value changes above historical cost going to other comprehensive income and changes below historical cost going to profit or loss [4]. That splits a single price move across two statements, so many treasuries find the cost model simpler, accepting that gains above cost stay unrecognised until sale.
The US legacy model: no way back
Before ASU 2023-08, in-scope crypto was treated as an indefinite-lived intangible under US GAAP. It was tested for impairment, written down to fair value when carrying amount exceeded it, and later increases and reversals of impairment were prohibited [4]. ASU 2023-08 replaced that with fair value through net income for in-scope assets, effective for fiscal years beginning after 15 December 2024 [4][7].
The old model has not disappeared. Scope under ASU 2023-08 requires, among other things, that the asset give the holder no enforceable rights to or claims on underlying goods, services or other assets [7]. Digital assets that fail any criterion follow other GAAP, which for an intangible usually means the ASC 350-30 cost-less-impairment model [6]. Wrapped tokens and many stablecoins are common examples. For those assets, a write-down in a bad quarter cannot be reversed when prices recover.
That may narrow. FASB staff told its advisory forum in October 2026 that the Board plans to propose widening the scope to cover crypto assets that give a right to receive another in-scope crypto asset, such as wrapped tokens, with an exposure draft expected in the first quarter of 2027 [7]. Until any final standard, the legacy model applies.
What to do
- Classify each holding by framework: IAS 2 broker-trader, IAS 2 inventory, or IAS 38 under IFRS; ASU 2023-08 fair value or legacy cost-less-impairment under US GAAP.
- Under IFRS, track original cost, accumulated impairment and the reversal ceiling per asset or unit of account, so reversals can be computed and evidenced.
- Document your useful-life conclusion, your recoverable-amount measure and the price source and timestamp used at each reporting date.
- For US out-of-scope assets, flag them in the subledger so nobody books a recovery that GAAP prohibits.
- Watch the FASB transfers exposure draft in 2027 if you hold wrapped tokens.
Sources
- IAS 36 Impairment of Assets (IFRS Foundation)
- IAS 38 Intangible Assets (IFRS Foundation)
- Holdings of Cryptocurrencies—June 2019 (agenda decision) (IFRS Interpretations Committee)
- Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (FASB)
- Cryptoasset holdings (KPMG IFRG)
- 2.3 Crypto Assets Within the Scope of ASU 2023-08 (Deloitte (DART Roadmap: Digital Assets))
- Accounting for Crypto Assets: Feedback and Standard-Setting Updates (ASAF, October 2026) (FASB staff, via IFRS Foundation)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.