Financial Reporting
ASC 350-60 for Private Companies: Fair Value Every Period, and the Crypto It Leaves Behind
ASC 350-60 marks crypto to fair value every period, with no private company relief. What qualifies, what doesn't, and what a token treasury does to your 409A.
By 409.AI Team - 2026-09-02
# ASC 350-60 for Private Companies: Fair Value Every Period, and the Crypto It Leaves Behind
A Series B company we'll call Ledgerhouse holds three things on its balance sheet that people at the company all call "crypto": a bitcoin position bought as treasury, a block of its own protocol token held back from the initial distribution, and a handful of NFTs it took as payment from an early customer.
Only one of those positions gets marked to fair value through earnings. The bitcoin qualifies. The company's own token and the NFTs don't, and they stay under the older rules where value only ever goes down on paper. Founders and finance leads routinely assume the new crypto standard swept everything in. It didn't, and the gap between what it covers and what people think it covers is where the audit adjustments come from.
Here's what actually applies, and what it does to your financial statements and your 409A.
The old model punished you for volatility in one direction
Before the change, crypto holdings were treated as indefinite-lived intangible assets under a cost-less-impairment model. You recorded the asset at cost. If its value fell below carrying amount, you wrote it down. If it recovered, you did nothing. The write-up came only when you sold.
The FASB was blunt about why this had to go. Its own summary says that accounting "for only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold does not provide relevant information that reflects (1) the underlying economics of those assets and (2) an entity's financial position" ([ASU 2023-08](https://storage.fasb.org/ASU%202023-08.pdf)).
Put numbers on it. Say Ledgerhouse bought 20 BTC early in the year at $60,000, so $1.2 million of cost. The price then dipped to $45,000 before recovering and closing the year at $95,000. Under the old model, and under the impairment practice most companies applied, that dip produced a $300,000 charge, locked carrying value at $900,000, and the recovery to $1.9 million never appeared anywhere. The balance sheet showed $900,000 for an asset the company could have sold that afternoon for more than double.
Under ASC 350-60, the same facts produce a $1.9 million carrying value and a $700,000 gain in net income. That's a $1 million swing in reported equity from identical transactions.
Six tests, and an asset has to pass all of them
ASC 350-60-15-1 applies to holdings of assets that meet all of the following: they meet the Codification's definition of intangible assets; they don't give the holder enforceable rights to or claims on underlying goods, services, or other assets; they're created on or reside on a distributed ledger based on blockchain or similar technology; they're secured through cryptography; they're fungible; and they're not created or issued by the reporting entity or its related parties.
Read that last one again, because it's the one that catches token issuers. Ledgerhouse's own protocol token fails criterion (f) on its face. The company issued it, so its treasury holding of that token is outside the standard no matter how liquid the token is. The NFTs fail criterion (e), since they aren't fungible. And any position that carries an enforceable claim on something else, which is a question you have to answer instrument by instrument rather than by asset category, fails criterion (b).
Anything that falls out stays where it was: general intangibles guidance, carried at cost less impairment, with the one-way ratchet described above. That model should be familiar if you've worked through [goodwill impairment as a private company under ASC 350](https://409.ai/articles/goodwill-impairment-private-company-asc-350). The mechanics differ, but both demand a discipline that most crypto-native finance teams quietly stopped practicing the moment they heard fair value was coming.
There's no private company version of this rule
Private companies often get a delayed effective date, a practical expedient, or a reduced disclosure package. Here, they got none of the three.
The FASB says so in its basis for conclusions. The Board consulted the Private Company Council and considered its own Private Company Decision-Making Framework "to determine whether exceptions or practical expedients related to measurement, presentation, and disclosure were needed." It concluded they weren't, because private company investors didn't report different informational needs for crypto assets.
So the amendments apply to all entities for fiscal years beginning after December 15, 2024, including interim periods within those years. For a calendar-year private company, that means fiscal 2025 was the first year, and the fiscal 2025 audited financials landing in 2026 are the first ones examined under it. Adoption runs through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the year of adoption, so the recovery your old impairments never let you record shows up in equity rather than in current-year income.
The fair value number is a real exercise, not a price lookup
Measurement runs through ASC 820, and that's where the work varies enormously by asset.
For bitcoin, identifying a principal market and pulling a quoted price is close to mechanical. For a thinly traded token, it isn't. The Board specifically considered excluding crypto assets that lack an active market and decided against it, partly because "the existence of an active market is considered part of the fair value measurement of crypto assets in accordance with Topic 820."
Translation: an illiquid token that clears the six criteria is still measured at fair value every reporting period, and you're the one who has to build and defend that measurement. Once your inputs stop being observable quoted prices, you land where every other hard-to-value position lands, and [a single significant unobservable input pulls the whole measurement into Level 3](https://409.ai/articles/asc-820-level-3-classification-significant-unobservable-input). Funds have lived with this for years, and the way they [mark illiquid positions under ASC 820](https://409.ai/articles/asc-820-level-3-fair-value-fund-portfolio-valuation) is a reasonable template for an operating company holding tokens with no deep market.
The disclosure package assumes that work happened. At both interim and annual periods you disclose, for each significant holding, the name of the crypto asset, its cost basis, its fair value, and the number of units held, plus aggregated cost basis and fair value for holdings that aren't individually significant. Annually you add a rollforward from opening to closing balances that separately shows additions, dispositions, and gains and losses determined on a crypto-asset-by-crypto-asset basis, along with the cost basis method you used. There's also a standing disclosure for holdings subject to contractual sale restrictions, covering the fair value affected, the nature of the restriction, and how long it runs.
That last requirement matters more than it looks. A rollforward computed asset by asset can't be reconstructed from a year-end wallet balance. If you aren't tracking lots and dispositions as they happen, you'll rebuild a year of transaction history in the middle of your audit.
What a marked treasury does to your 409A
Two things, and they pull in different directions.
The first is the asset itself. The Section 409A regulations describe fair market value as a value set by the reasonable application of a reasonable valuation method, and the factors a method has to consider include the value of the company's tangible and intangible assets, the present value of anticipated future cash flows, and comparable market values ([26 CFR 1.409A-1(b)(5)(iv)(B)](https://www.law.cornell.edu/cfr/text/26/1.409A-1)). A treasury position is squarely a company asset. When it's large relative to the operating business, it starts to drive the answer, and the [asset-based approach](https://409.ai/articles/asset-based-approach-409a-valuation) carries weight it wouldn't otherwise get in an early-stage valuation.
The second is timing. That same regulation withholds the presumption of reasonableness when a valuation fails to reflect information material to value that became available after the valuation date. A treasury that represents a meaningful share of enterprise value and drops 40% in a quarter is exactly the kind of information that test contemplates. If you're granting options off a stale number in that situation, you're relying on a safe harbor you may no longer have. Our guide to [the trigger events that beat the annual calendar](https://409.ai/articles/409a-valuation-frequency-how-often-should-you-get-one) covers how to think about that, and [what actually earns safe harbor](https://409.ai/articles/409a-safe-harbor-price-vs-qualified-appraiser) covers what you're protecting.
There's a subtler effect too. Your net income now absorbs unrealized gains and losses on the treasury. Any valuation that leans on earnings, whether a market multiple or a normalized cash flow, needs those swings stripped out first. A company that looks wildly profitable because bitcoin ran in Q4 hasn't built a more valuable operating business, and an appraiser who treats that gain as recurring earnings will hand you a number you can't defend.
Expect the auditor to start here
Fair value estimates are where audits of crypto-holding companies concentrate their effort, and the standards for auditing estimates ask for the reasoning behind management's assumptions rather than just the output. If your bitcoin mark is a quoted price from your principal market, that conversation is short. If you're marking a token with no active market, it's the longest conversation in the audit. You'll recognize the pattern from [what a first audit tests about your 409A](https://409.ai/articles/first-audit-409a-valuation-au-c-540-assumptions): the number matters less than whether you can show your work, which is also what a [fair value engagement under ASC 820](https://409.ai/products/asc-820) is built to produce.
So if you hold crypto and you're heading into a first audited year or a financing, do one inventory before anything else. List every digital position, run each one against the six criteria in ASC 350-60-15-1, and write down which model it falls under and why. The companies that get caught out aren't the ones holding volatile assets. They're the ones that assumed a single rule covered a portfolio built from three different kinds of instrument.