FRS 102 has no section written for cryptoassets, so a company has to fit its holdings into the existing rules. Tokens bought and sold in the ordinary course of business are stock under Section 13, held at the lower of cost and estimated selling price less costs to sell, while tokens held as an investment are usually intangible assets under Section 18, held at cost less amortisation and impairment or, where there is an active market, at a revalued amount. They are not cash and not financial instruments.

Why is crypto not cash or a financial instrument?

The FRS 102 glossary defines cash as cash on hand and demand deposits, and a cash equivalent as a short term, highly liquid investment that is readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. ICAEW’s Technical Advisory Service helpsheet on cryptocurrencies under FRS 102 says it is generally accepted that cryptocurrencies are not cash because they are not legal tender, and that they are unlikely to be cash equivalents because their value is subject to a greater than insignificant risk of change.

They also fail the financial instrument definition. A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. Someone holding bitcoin can sell it on an exchange, but has no contractual right to receive cash from anyone, so ICAEW concludes it is not a financial instrument under FRS 102. The IFRS Interpretations Committee reached the same conclusions under IFRS in its June 2019 agenda decision on holdings of cryptocurrencies, which said a holding is neither cash nor a financial asset.

When is crypto treated as stock?

Inventories in FRS 102 include assets held for sale in the ordinary course of business. ICAEW’s view is that tokens are not precluded from being stock where buying and selling them is part of the company’s ordinary activities, for example a business trading crypto in the short term. The deciding question is the business model: what the company intends to do with the tokens it holds.

If tokens are stock, paragraph 13.4 requires them to be measured at the lower of cost and estimated selling price less costs to complete and sell. A fall in market price below cost therefore produces a write down through profit or loss, but a rise above cost is not recognised until the tokens are sold.

There is an alternative. Paragraph 13.3 allows inventories to be measured at fair value less costs to sell through profit or loss, but only where that is a more relevant measure of performance because the entity operates in an active market where sale can be achieved at published prices and the inventory is a store of readily realisable value. ICAEW suggests this may be acceptable for an entity that trades in a cryptocurrency with an active market. It is the closest UK GAAP gets to the broker trader treatment the IFRS Interpretations Committee described.

When is crypto an intangible asset?

For most companies that simply hold crypto as an investment or treasury asset, the answer is Section 18. The glossary defines an intangible asset as an identifiable non monetary asset without physical substance, and an asset is identifiable if it is separable, meaning it can be sold, transferred or exchanged. Tokens traded on exchanges meet that test, and ICAEW states that an investment in cryptocurrencies would likely be an intangible asset.

ICAEW’s helpsheet on exchange based tokens adds that recognition starts when the entity obtains control, presumed to be the point at which it can make sell and hold decisions over the token. Paragraph 18.9 requires initial measurement at cost.

Cost model or revaluation model?

Paragraph 18.18 gives a policy choice, applied to a whole class of intangible assets:

  • Cost model (paragraph 18.18A): cost less accumulated amortisation and accumulated impairment losses.
  • Revaluation model (paragraph 18.18B): fair value at the date of revaluation less subsequent amortisation and impairment, but only where fair value can be determined by reference to an active market.

Under paragraph 18.18G a revaluation increase goes to other comprehensive income and a revaluation reserve, except to the extent it reverses a decrease on the same asset previously charged to profit or loss. Under paragraph 18.18H a decrease goes first against any revaluation surplus for that asset and any excess to profit or loss. Paragraph 18.18D requires revaluations often enough that the carrying amount does not differ materially from fair value at the reporting date; ICAEW advises valuing at least at each period end given the volatility. If a token in a revalued class has no active market, paragraph 18.18 says it stays at cost less amortisation and impairment.

The active market test is not automatic. ICAEW points out that an active market may exist for some tokens but not others, and that the Periodic Review 2024 amendments describe an active market as one in which transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Thinly traded tokens are likely to fail it.

Does crypto have to be amortised?

Paragraph 18.19 says that for FRS 102 every intangible asset has a finite useful life, and paragraph 18.20 caps the life at 10 years where a reliable estimate cannot be made. Amortisation is charged on the depreciable amount, which is cost less residual value. Paragraph 18.23 requires residual value to be assumed to be zero unless, among other routes, there is an active market from which it can be determined and that market is likely still to exist at the end of the useful life. ICAEW notes that where residual value is equal to or above cost, no amortisation is charged. Impairment is tested under Section 27, applied through paragraph 18.25.

How might the two treatments differ in practice?

Illustration only. A company buys 1 token for £40,000 in March. At its 31 December year end the token trades at £30,000 on an exchange with heavy daily volume. It has no plans to sell. Amortisation is ignored to keep the figures simple.

Treatment Year end carrying amount Where the £10,000 fall goes
Intangible, cost model £30,000 after impairment Profit or loss as an impairment loss
Intangible, revaluation model £30,000 Profit or loss, as there is no earlier surplus to absorb it
Stock at lower of cost and selling price £30,000 less costs to sell Profit or loss as a stock write down

If instead the price had risen to £50,000, the cost model would show £40,000 with no gain, the revaluation model would show £50,000 with a £10,000 surplus in other comprehensive income, and stock at the lower of cost and selling price would stay at £40,000. Only stock measured at fair value less costs to sell under paragraph 13.3 would put the gain through profit or loss.

Where does crypto go on the balance sheet?

ICAEW explains that tokens accounted for as stock sit within stocks under current assets. Tokens accounted for under Section 18 can be shown either as intangible fixed assets or, if that better reflects the intended use, as fixed asset investments under the heading other investments other than loans in the Companies Act formats, because investment is not a defined term in the Companies Act 2006. Whichever is chosen, the accounting still follows Section 18. Clear accounting policy disclosure is needed, and the disclosure requirements of Section 13 or Section 18 apply depending on the classification.

What about micro entities and the tax position?

A micro entity reporting under FRS 105 cannot revalue. FRS 105 explains that the micro entities regulations do not permit the alternative accounting rules or the fair value rules, so only historical cost applies, and paragraph 13.9 of FRS 105 caps the useful life of an intangible at ten years where it cannot be reliably estimated. Moving to FRS 102 is the only route to a revaluation model.

For corporation tax, CRYPTO40100 says trading profits involving cryptoassets follow GAAP, subject to adjustments required by law, and every transaction must be converted to sterling using a consistent, recorded method. CRYPTO41150 explains that tokens accounted for as intangible assets fall within the intangible fixed assets rules in Part 8 of the Corporation Tax Act 2009 only if they are also held for use on a continuing basis; tokens simply held, even in the course of the company’s activities, do not qualify. Otherwise disposals are usually chargeable gains. See how HMRC taxes cryptoassets for the wider tax picture.

What mistakes come up most often?

  • Showing crypto as cash at bank or as a current asset investment at market value, which FRS 102 does not support.
  • Revaluing a token that has no active market, or revaluing some tokens in a class and not others.
  • Putting revaluation gains through profit or loss under Section 18. Only the paragraph 13.3 stock route does that.
  • Forgetting impairment under the cost model when prices fall at the year end.
  • Not documenting the business model judgement. ICAEW stresses that the treatment depends on what the company does with the tokens and that choices should be recorded and justified.
  • Treating unrealised revaluation gains as distributable. ICAEW says whether crypto gains are distributable needs significant judgement, so check before paying dividends out of them.

For the underlying rules see FRS 102 Section 18 on intangible assets, stock valuation and impairment under FRS 102.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.