Which price is fair value? Principal markets for crypto, explained

Fair value for a token is an exit price in the market you can access with the most volume. How to pick it, and what you cannot adjust for.

2026-10-17 · 5 min read

If you measure crypto at fair value, the number on your balance sheet depends on which market's price you use and at what moment. Both choices are judgments your auditor will test, so they need to be made deliberately and written down.

Under US GAAP, ASU 2023-08 requires in-scope crypto assets to be measured at fair value through net income, and it points to the existing fair value standard, ASC 820, rather than writing new valuation rules [2][3]. Under IFRS, IFRS 13 plays the same role whenever another standard requires or permits fair value [1]. The two standards are closely aligned on the concepts below.

Fair value is an exit price

Fair value is the price you would receive to sell the asset in an orderly transaction between market participants at the measurement date [1]. It is market-based, not entity-specific: your intention to hold a token long term does not change its fair value [1]. For crypto this usually means a sale price on a venue, not the price you paid or a mid-point you would like to see.

Finding the principal market

The measurement assumes a sale in the principal market for the asset, meaning the market with the greatest volume and level of activity that you can access. Only if there is no principal market do you use the most advantageous market [1][2]. Several points follow from this.

• Access matters. A venue you are not onboarded to, or cannot legally use, cannot be your principal market, even if it is the largest in the world [1][2].
• The market you normally trade in is presumed to be the principal market unless there is evidence otherwise. You do not need an exhaustive search of every venue, but you must use information that is reasonably available [1][2].
• Different entities can reach different principal markets for the same token, because their access and trading patterns differ [2].
• A price aggregator is not a market. Aggregated index data can help you identify which venue has the most activity, but the aggregator itself cannot be the principal market [2].
• Transaction costs do not adjust the price. Fees are a feature of the transaction, not the asset. They are relevant in choosing the most advantageous market where there is no principal market, but the fair value itself is not reduced by them [1].

No discount for holding a lot

Fair value is measured for the unit of account, which for most crypto is the individual unit. If you hold more than the market trades in a day, you still multiply the quoted price by the quantity held; a blockage discount for the size of your position is not permitted [1]. US GAAP reaches the same answer: ASC 820 does not allow premiums or discounts that reflect the size of the holder's position, and ASU 2022-03 confirmed for equity securities that a holder's contractual sale restriction is not a characteristic of the asset and does not reduce fair value [4].

For crypto, ASU 2023-08 adds disclosure of holdings subject to contractual sale restrictions, including their nature and remaining duration [2]. Whether a particular lock-up is a feature of the token itself or of your contract is a judgment, and should be documented case by case rather than assumed.

Level 1, 2 or 3

A quoted price for the identical token in an active market, meaning one with enough frequency and volume to give pricing on an ongoing basis, is a Level 1 input and must be used without adjustment when available [1]. Thinly traded tokens may only support Level 2 inputs, such as prices for similar assets, or Level 3 inputs, which are unobservable and need a model and more disclosure [1]. The overall measurement is categorized at the lowest level of any significant input [1].

IFRS: when fair value applies at all

Under IFRS, most crypto holdings are intangible assets under IAS 38, or inventory under IAS 2 if held for sale in the ordinary course of business [6]. IAS 38 allows a revaluation model only by reference to an active market [5], and commodity broker-traders under IAS 2 may measure at fair value less costs to sell [6]. So the principal market question arises for IFRS reporters too, typically for revaluations, broker-trader inventory and impairment testing, but only after the measurement model has been chosen.

What auditors look at

PCAOB staff have reminded auditors that when third-party pricing information is significant to crypto valuations, they must evaluate whether the company used it appropriately and whether it is reliable [7]. Expect questions about how you chose the venue, why the cut-off time is appropriate for a market that trades around the clock, and how you control changes. ASC 820 and IFRS 13 do not prescribe a specific cut-off time for 24/7 markets [2], so this is a policy you set and apply consistently.

What to do

• Write a fair value policy that names, for each material token, the principal market and the evidence used (volume data, your access, trading history).
• Fix a measurement cut-off time and time zone for period ends and apply it consistently across all tokens.
• Re-assess the principal market at least each reporting period, and record why it changed if it did.
• Do not net trading fees or apply size discounts to fair value; capture fees separately.
• Tag each holding with its fair value hierarchy level, and flag tokens that lack an active market for model-based valuation and extra disclosure.
• Keep price evidence (venue, timestamp, source) so your auditor can re-perform the measurement.

Sources

1. IFRS 13 Fair Value Measurement (IFRS Foundation)
2. Heads Up: Frequently Asked Questions About the FASB's Standard on Crypto Assets (ASU 2023-08) (Deloitte DART)
3. Roadmap: Digital Assets, 4.2 Crypto Assets That Are Within the Scope of ASU 2023-08 (Deloitte DART)
4. Heads Up: FASB Clarifies Fair Value Measurement Guidance (ASU 2022-03) (Deloitte DART)
5. IAS 38 Intangible Assets (IFRS Foundation)
6. Holdings of Cryptocurrencies, IFRS Interpretations Committee agenda decision (June 2019) (IFRS Foundation)
7. Spotlight: Inspection Observations Related to Public Company Audits Involving Crypto Assets (June 2023) (PCAOB)

General information for finance teams, current as of publication. Not legal, tax or accounting advice.

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