Uploaded February 2022 | Updated September 2026, 3 weeks ago
Accounting for Crypto: It Only Goes Down.
Some people have asked me how to account for cryptocurrencies on their books. The good news is that this is pretty straightforward in a double-entry system. The bad news is that depending on whether these are your personal books, or a business’s books, the answer will be very different.
If you’ve got crypto on your personal books, then you can simply treat them like any other commodity. Exchange them for dollars on purchase, and on sale, and account for any income or loss at the time the sale happens. If you want to keep track of gains or losses as the price fluctuates, you can periodically mark the price to market, using an Equity account reflecting unrealized gains and losses as the counter account.
However, if it’s your business that has bought crypto, then you have a BIG problem. This is because under the Generally Accepted Accounting Principles, or GAAP, cryptocurrencies are considered intangible assets, not commodities. Intangible assets cannot be marked up to market as their price rises, but can only be marked down as they lose value. This is part of why companies like Microstrategy which went heavy into Bitcoin have had such a rough time of it: when the price of their cryptocurrency drops, they MUST show a loss in their financials, but when the price rises, they CANNOT show a corresponding gain. If you’re a business that is going to invest in cryptocurrencies then until you sell, your crypto can only decrease in value, at least as far as your financial statements are concerned.
This has been Counting Like It’s 1979. Thanks for watching!
Accounting for Crypto: It Only Goes Down.
Some people have asked me how to account for cryptocurrencies on their books. The good news is that this is pretty straightforward in a double-entry system. The bad news is that depending on whether these are your personal books, or a business’s books, the answer will be very different.
If you’ve got crypto on your personal books, then you can simply treat them like any other commodity. Exchange them for dollars on purchase, and on sale, and account for any income or loss at the time the sale happens. If you want to keep track of gains or losses as the price fluctuates, you can periodically mark the price to market, using an Equity account reflecting unrealized gains and losses as the counter account.
However, if it’s your business that has bought crypto, then you have a BIG problem. This is because under the Generally Accepted Accounting Principles, or GAAP, cryptocurrencies are considered intangible assets, not commodities. Intangible assets cannot be marked up to market as their price rises, but can only be marked down as they lose value. This is part of why companies like Microstrategy which went heavy into Bitcoin have had such a rough time of it: when the price of their cryptocurrency drops, they MUST show a loss in their financials, but when the price rises, they CANNOT show a corresponding gain. If you’re a business that is going to invest in cryptocurrencies then until you sell, your crypto can only decrease in value, at least as far as your financial statements are concerned.
This has been Counting Like It’s 1979. Thanks for watching!
