Expected credit losses on crypto loans: CECL, IFRS 9 and collateral
Lent crypto, fiat loans backed by crypto, and market-maker loans each sit differently under credit-loss rules, and US GAAP may change in 2027.
If you lend crypto, lend cash against crypto collateral, or lend tokens to a market maker, you are exposed to the borrower not paying you back. How that exposure shows up in your accounts depends on what you lent, which framework you report under, and, for US GAAP, a standard-setting project that is still open as of October 2026.
The two credit-loss models in brief
Under US GAAP, ASC 326 (the CECL model from ASU 2016-13) requires an allowance on financial assets measured at amortized cost, such as loans and other financing receivables, so they are shown at the net amount expected to be collected [1]. The estimate uses past experience, current conditions and reasonable and supportable forecasts, and there is no requirement to wait for a loss to become probable [1]. Changes in the allowance go through net income as credit loss expense [1].
Under IFRS 9, one expected credit loss model applies to financial assets at amortised cost or at fair value through other comprehensive income, lease and trade receivables, loan commitments and financial guarantees [6]. A new asset starts with 12-month expected losses; if credit risk increases significantly, the allowance moves to lifetime expected losses [6].
Both models are built for financial assets. That is the first question for any crypto loan: is what you hold a financial asset at all?
Lending crypto: current US practice
Today, US practice follows SEC staff views shared in late 2022. The lender generally derecognises the lent crypto because the borrower can use it freely, and records a crypto asset loan receivable for the right to get it back [2][3]. That receivable is measured at the fair value of the lent crypto, both at the start and at each reporting date, with changes in earnings [2][3].
Because the lender now carries the borrower's credit risk, the lender records an allowance for expected credit losses using the principles of ASC 326 [2][3]. Deloitte notes this is not strictly within ASC 326's scope, since the receivable is for crypto rather than cash, but the SEC has said applying the CECL approach would be consistent [2].
| Account | Debit | Credit |
|---|---|---|
| Lend 10 ETH carried at fair value 10 ETH x 3,000 = 30,000; carrying amount equals fair value, so no gain or loss on derecognition | ||
| Crypto asset loan receivable — ETH | 30,000 | |
| Digital assets — ETH | 30,000 | |
| Record expected credit loss at period end Management estimate based on borrower credit, collateral and term | ||
| Credit loss expense | 150 | |
| Allowance for credit losses — crypto loans | 150 | |
| ETH rises to 3,300 by period end Receivable remeasured: 10 x 300 = 3,000 | ||
| Crypto asset loan receivable — ETH | 3,000 | |
| Gain on crypto loan receivable | 3,000 | |
Where US GAAP is heading
The FASB has tentatively decided that a lender of in-scope crypto should not derecognise it. The asset would instead be reclassified as encumbered and kept at fair value, with that fair value including the credit risk of the counterparty holding the crypto during the loan [4]. FASB staff expect the proposal in the first quarter of 2027 with a 60-day comment period [4]. If finalised, the borrower's credit risk would sit inside the fair value measurement rather than in a separate CECL-style allowance. Until a final standard is issued, current practice continues.
Lending cash or stablecoins against crypto collateral
A loan of dollars secured by bitcoin is an ordinary financial asset at amortized cost, so ASC 326 applies directly [1]. Collateral matters a great deal. ASC 326 allows a practical expedient where the borrower must keep topping up collateral as its fair value moves: you compare the amortized cost with the fair value of collateral, and expected losses can be zero if collateral covers the balance [1]. ASU 2019-11 added that you must reasonably expect the borrower to keep replenishing the collateral [7].
- Loan: 1,000,000 USD at amortized cost, with daily margin calls on BTC collateral.
- Case A: collateral fair value 1,400,000 and the borrower has always met calls. Expected loss may be zero.
- Case B: collateral falls to 900,000 and you no longer expect top-ups. Measure expected loss on the unsecured 100,000, not the full balance.
- Figures are illustrative.
Crypto prices can gap faster than margin calls are met, so the replenishment expectation needs evidence: call history, liquidation rights and how quickly you can actually sell the collateral. Stablecoin loans need a first step of their own, because whether a given stablecoin is a financial asset affects which guidance applies; Deloitte flags this as an open question for lending [2].
IFRS reporters
The IFRS Interpretations Committee concluded in 2019 that a holding of cryptocurrency is not a financial asset: it is not cash and gives no contractual right to receive cash or another financial asset [5]. It follows that a right to receive the same crypto back is not obviously a financial asset either, so IFRS 9's impairment model does not neatly apply to crypto-for-crypto loans. IFRS has no specific guidance here; entities make and disclose a policy. A loan of fiat secured by crypto, by contrast, is a financial asset within IFRS 9, with collateral feeding into the expected cash shortfall [6].
Market-maker loans
Token loans to market makers follow the same analysis as other crypto lending when you lend tokens you hold as assets. Two complications are common. First, a project lending its own tokens is not lending an asset within ASC 350-60, which excludes crypto created or issued by the reporting entity or its related parties [4], so a different analysis applies. Second, these contracts often contain options or price-linked settlement terms; ask your auditor early whether any feature needs separate accounting.
Disclosures auditors will expect
- Terms, risks and nature of each lending arrangement [2].
- Collateral type, amount and terms, including top-up requirements and how you monitor it [2].
- How you estimated expected credit losses and the inputs used [2].
- Concentrations, such as a large share of lending to one counterparty, and related parties [2].
What to do
- Classify every open loan: crypto lent, fiat or stablecoin lent against crypto, or own-token loan.
- Keep per-loan records of counterparty, term, collateral, margin-call history and liquidation rights.
- Document your credit-loss method, including the forecast inputs and why the collateral expedient does or does not apply.
- Model how the FASB's proposed encumbered-asset approach would change your numbers, ahead of the 2027 exposure draft.
- Under IFRS, write down the policy you use for crypto-for-crypto loans and disclose it.
This is general information; the right answer depends on contract terms and should be agreed with your auditor.
Sources
- Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326) (FASB)
- Roadmap: Digital Assets, 8.2 Crypto Asset Lending (Deloitte DART)
- Lenders' accounting for crypto intangible asset loans (KPMG)
- Accounting for Crypto Assets: Feedback and Standard-Setting Updates (ASAF, October 2026, Agenda Paper 7B) (FASB staff via IFRS Foundation)
- Holdings of Cryptocurrencies—June 2019 (agenda decision) (IFRS Interpretations Committee)
- IFRS 9 Financial Instruments: Project Summary (July 2014) (IASB)
- FASB Improves Guidance on Credit Losses (Heads Up, ASU 2019-11) (Deloitte DART)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.