Digital Asset Accounting: Asset and Currency Duality
Investment managers treat cryptocurrency like cash operationally, expecting immediate liquidity from a digital-native asset. But under the U.S. GAAP (ASC 350), most cryptocurrencies are accounted for as intangible assets, not cash or a cash equivalent.
“U.S. GAAP defines cryptocurrencies as digital records that use cryptography … on a decentralized distributed ledger. There is an argument that cryptocurrencies typically aspire to some additional purpose, such as facilitating transactions, and should be treated as commodities, like gold and silver.” — CPA Journali
ASC is the authoritative source for generally accepted accounting principles (U.S. GAAP). As such, firms have to classify and track crypto like an equity position, regardless of trading and treasury workflows. In the back office, crypto positions are processed just like equities or other assets, creating an operational duality.
Accountants carry out lot opening, lot closing, and unit-level reconciliation. When a trade generates commissions in ether, for example, it doesn’t count as a cash receipt. It gets recorded with its own lot to calculate gains, losses, and position values for ASC-compliant reporting. Otherwise, accounting cannot close the books on that position.
Just over half of traditional hedge funds now carry some form of crypto exposure, a figure that has nearly doubled in two years.ii The operational infrastructure at most of those firms was not built with the duality in mind. Firms that model only one side of the duality will get the other wrong.
The cause of the duality
The duality in crypto comes from a mismatch between its use in trading as a cash equivalent and its definition under U.S. GAAP and International Financial Reporting Standards (IFRS). Crypto does not meet the definition of cash under ASC 305 (Cash and Cash Equivalents) or a monetary asset under IAS 7 because it is not legal tender, not issued by a sovereign entity, and does not represent a claim on an issuer.
The closest category for crypto is non-monetary assets without physical substance. It falls under ASC 350, which governs intangible assets like patents, trademarks, and capitalized software. In 2023, the Financial Accounting Standards Board (FASB) issued an update moving crypto to fair value for most calendar-year firms starting in 2025, but it still counts as an intangible asset.
In practice, crypto can be used to fund trades, pay fees, post collateral, and move liquidity across venues. These roles are traditionally reserved for cash, meaning crypto behaves like a base currency operationally. Using an asset like cash in operations while treating it as an investment in accounting creates two parallel interpretations of the same activity.
Both approaches end up relevant, depending on who, what, and when.
How duality plays out
When a trader uses crypto, the balances seem like they simply move from one place to another. Just like with cash, even across currencies, the focus is on overall balances and FX remeasurement. You don’t track which specific unit of currency was used.
Nuances arise because each unit carries its own acquisition cost and timestamp. Under ASC 350, crypto holdings are classified as intangible assets, so any operational use such as funding a trade, paying fees, or posting collateral is treated as a disposal event that triggers gain or loss recognition. When a trader uses crypto to fund a trade or settle a position, that specific history becomes relevant for accounting. For example, commission received in ETH or a position funded in BTC gets treated as a lot and matched to its cost basis. You have to recognize a gain or loss, and timing matters. As a result, routine treasury workflows involve not just tracking balances but also identifying which specific units were used, something cash operations typically don’t require.
The problem with single views
These differing perspectives matter when systems are built around a single interpretation of an asset.
In many workflows, crypto is treated as a balance that moves by funding trades, paying fees, and reallocating across venues. From that perspective, activity is continuous and fungible. At the same time, each use of crypto involves specific units acquired at different times and prices, which determine accounting outcomes. The same transaction must therefore be understood both as a movement of value and as the use of particular units with cost and history.
A single-view system can represent one of these interpretations well, but not both simultaneously. If activity is captured only at the balance level, the unit-level detail needed for accounting must be derived later. If it is captured only at the asset level, it does not reflect how that balance is actually used in operations.
Consider a portfolio manager preparing to fund a position using BTC. She sees an available balance and treats it as a liquid resource that can be deployed immediately. That view is operationally correct because decisions are made based on what is available to use.
At the same time, that action draws from specific BTC units acquired over time, each with its own cost. The decision itself does not depend on those details, but the outcome does. What appears as a single balance in operations must also be understood as a composition of units for accounting.
Imagine a crypto hedge fund starts the quarter with 75 BTC and uses it across fees, funding, and rebalancing. Operationally, this looks straightforward as balances move and positions get funded.
On the other hand, accounting needs to determine which units were used, their cost, and the gain or loss at that moment, and the variation can be wide across a quarter. For example, BTC ranged from $62,000 to $124,000 in Q1 2026,iii meaning no two transactions occurred at the same price.
The underlying balance is the same, but how it is understood is different. This becomes a cumbersome scramble to pull exchange API data, match timestamps to trade records, and reconstruct position history in spreadsheets. When they can’t reconcile some transactions, it results in late books and auditor flags.
Hitting the books
The challenge is consistently representing two interpretations of the same activity. Capturing both views accurately requires a shared data foundation where each transaction records the movement of value, the specific units involved, and associated costs. Both operational and accounting perspectives can be derived from that single representation.
For firms active in crypto, this duality is a structural reality. Success depends on moving past manual month-end reconciliations toward an infrastructure that handles this divergence natively.
Authored By
Juhi Ghosh
Juhi Ghosh is a senior product and technology leader with 20 years of experience building and scaling financial platforms. As Senior Vice President of Product at Arcesium, she founded and led the development of the firm’s UBOR platform — Arcesium’s core investment and portfolio accounting engine — taking it from inception to a mission-critical system processing millions of positions and trades per day.
Juhi’s expertise spans product strategy, enterprise platform architecture, complex financial domain modeling, and large-scale engineering execution in highly regulated environments. She specializes in translating complex financial infrastructure into durable, scalable platforms that drive long-term business value.
Juhi holds a Master of Science in Management Information Systems from Temple University and a Bachelor’s degree in Computer Engineering from Pune University.
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[i] CPA Journal, 2024. https://www.cpajournal.com/2024/12/25/fasbs-new-guidance-on-accounting-for-crypto-assets/
[ii] Alternative Investment Management Association (AIMA), 2025. https://www.aima.org/article/press-release-crypto-friendly-regulatory-changes-accelerate-institutional-investment.html
[iii] CoinMarketCap, 2026. https://coinmarketcap.com/currencies/bitcoin/ (Last accessed: 1 April 2026)
