IAS 38 for crypto: the cost model versus the revaluation model
Under IFRS most crypto holdings are intangible assets. How the two IAS 38 models work, where gains land, and why the choice is closer than it looks.
If you report under IFRS and hold tokens as an investment or for use in the business, you are almost certainly applying IAS 38 and have to choose between carrying them at cost less impairment or at a revalued amount. The choice changes your balance sheet and other comprehensive income far more than it changes profit or loss.
Why IAS 38 applies at all
In June 2019 the IFRS Interpretations Committee concluded that a cryptocurrency meeting its description is not cash and not a financial asset, but does meet the definition of an intangible asset. Holdings held for sale in the ordinary course of business fall under IAS 2 Inventories; everything else falls under IAS 38 [1]. The Committee's description covered tokens that are not issued by an authority or other party and do not create a contract with the holder [1], so stablecoins and tokens carrying redemption rights need their own analysis.
The IASB has since added cryptoassets to its research pipeline, selected at its November 2025 meeting, meaning work is expected to start before its next agenda consultation in 2028 [5]. Nothing has changed in the standards yet.
The cost model
Under the cost model the asset is carried at cost less accumulated amortisation and impairment [2][3]. IASB staff reasoned that because a token only produces cash through sale, and there is no foreseeable limit on when it could be sold, it is an indefinite-life intangible that is not amortised but is subject to IAS 36 impairment testing [3].
When prices fall, the carrying amount is written down through profit or loss. When prices recover, IAS 36 allows a reversal for assets other than goodwill, but only up to the carrying amount the asset would have had with no impairment [6]. For a token that means original cost is the ceiling. A holding bought at 60,000 and now worth 90,000 stays at 60,000 on the balance sheet.
The revaluation model
The revaluation model carries the asset at fair value at the revaluation date, less later amortisation and impairment, and is only available when fair value can be measured by reference to an active market [2][3]. Three rules shape it.
- Whole class. If one asset is revalued, every asset in its class must be too, unless there is no active market for a particular asset, which then stays at cost [2].
- Frequency. Assets with significant and volatile price movements need revaluing at least annually [2]. Given how token prices move, revaluing at each reporting date is the practical reading.
- Asymmetric gains and losses. Increases go to other comprehensive income and a revaluation surplus in equity, except to the extent they reverse an earlier decrease taken to profit or loss. Decreases go to profit or loss, except to the extent there is surplus for the same asset to absorb them [2][3].
When the asset is sold, the accumulated surplus may be transferred directly to retained earnings; it does not pass through profit or loss [2]. The upside on a revalued holding therefore never appears in the income statement.
Same profit, different balance sheet
Put the two models side by side and a pattern appears. Movements below cost hit profit or loss in both, and movements above cost are excluded from profit or loss in both, going to OCI under revaluation and simply not recognised under cost. IASB staff summarised it the same way: under IAS 38, fair value changes above historical cost go to OCI and changes below go to profit or loss [4].
| Account | Debit | Credit |
|---|---|---|
| Year 1, price 80,000. Revaluation model only Fair value 800,000 - carrying 600,000 = 200,000 increase to OCI. Cost model: no entry. | ||
| Digital assets — BTC | 200,000.00 | |
| Revaluation surplus (OCI) | 200,000.00 | |
| Year 2, price 50,000. Cost model Recoverable amount 500,000 against cost 600,000 | ||
| Impairment loss (P&L) | 100,000.00 | |
| Accumulated impairment — BTC | 100,000.00 | |
| Year 2, price 50,000. Revaluation model Decrease 300,000: first 200,000 absorbed by surplus, remaining 100,000 to P&L | ||
| Revaluation surplus (OCI) | 200,000.00 | |
| Revaluation loss (P&L) | 100,000.00 | |
| Digital assets — BTC | 300,000.00 | |
| Year 3, price 75,000. Cost model Recoverable 750,000, but reversal capped at original cost 600,000 | ||
| Accumulated impairment — BTC | 100,000.00 | |
| Impairment reversal (P&L) | 100,000.00 | |
| Year 3, price 75,000. Revaluation model Increase 250,000: 100,000 reverses the earlier P&L loss, 150,000 to OCI | ||
| Digital assets — BTC | 250,000.00 | |
| Revaluation gain (P&L) | 100,000.00 | |
| Revaluation surplus (OCI) | 150,000.00 | |
How entities actually choose
Practice is more varied than often assumed. In a 2021 search of published financial statements, IASB staff found 87 entities reporting cryptoasset holdings, 80% of which measured them at fair value in some form; 34 entities, or 39% of the total, used the IAS 38 revaluation model [4]. The rest of the fair value group were largely applying IAS 2.
Reasons entities give for staying on cost are practical. Revaluation does not deliver fair value through profit or loss, which is what many users want [3]. Committee members also flagged that it can be unclear whether a market is active when a token only trades against other tokens, and hard to value one at all without an active market [3]. A mixed portfolio of large and thinly traded tokens can therefore end up partly revalued and partly at cost, which needs careful class definitions.
Reasons for revaluing are mainly balance sheet relevance: holdings shown near market value rather than at a cost that may be years old. The ACCA notes that a daily-traded asset like bitcoin is a reasonable example of one with an active market [7].
What to do
- Confirm each holding is within the 2019 agenda decision's description, and analyse stablecoins and claim-bearing tokens separately.
- Define asset classes for IAS 38 and document why each token in a revalued class has an active market.
- If on cost, set up an impairment test at each reporting date that tracks original cost per lot so reversals are capped correctly.
- If revaluing, track the surplus asset by asset, because decreases can only be offset against surplus for the same asset.
- Disclose the judgments involved, and the IFRS 13 fair value disclosures where you revalue, as the Committee highlighted [1].
Sources
- Holdings of Cryptocurrencies—June 2019 (agenda decision) (IFRS Foundation / IFRS Interpretations Committee)
- AASB 138 Intangible Assets: Measurement after recognition (Australian Accounting Standards Board)
- Cryptocurrencies: Potential new research project (IASB staff paper, Agenda ref 12D, November 2018) (IFRS Foundation)
- IASB consideration of cryptocurrencies and related transactions (FASB-IASB joint education meeting, Agenda ref 12B, September 2022) (IFRS Foundation)
- IASB pipeline projects (IFRS Foundation)
- AASB 136 Impairment of Assets: Reversing an impairment loss (Australian Accounting Standards Board)
- Accounting for cryptocurrencies (ACCA)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.