SFFAS 3 Seized and Forfeited Digital Assets

FASAB Contact: Josh R. Williams, williamsjr@fasab.gov, 202-512-4051

Project Objective:

The objective of this project is to issue a Technical Bulletin that would clarify existing standards for seized and forfeited digital assets. SFFAS 3, Accounting for Inventory and Related Property, provides guidance for seized and forfeited property. However, guidance is needed to clarify the existing reporting requirements to the unique characteristics of digital assets that the Board did not consider when developing SFFAS 3.

History of Board Deliberations

October 17-18, 2023

At the October 2023 meeting, staff proposed a draft Technical Bulletin that would clarify and elaborate upon seized and forfeited property guidance in SFFAS 3, Accounting for Inventory and Related Property, to address digital assets, a new and unique resource not previously considered by the Board.

Specifically, the Technical Bulletin would clarify that reporting entities should treat central bank digital currencies as monetary property and all other digital assets (for example, cryptocurrencies, stablecoins, non-fungible tokens, etc.) as nonmonetary property when applying the SFFAS 3 reporting requirements. The Technical Bulletin also provides clarifying guidance for measuring market value and applying SFFAS 3 disclosure requirements for seized and forfeited digital assets. 

The Board unanimously supported moving forward with the Technical Bulletin. All members generally agreed that the guidance would help reporting entities apply the existing SFFAS 3 reporting requirements to an increasingly material amount of seized and forfeited digital assets. Some members suggested non-substantive edits to the Technical Bulletin and requested that staff address certain points of clarification in the basis for conclusions.

Staff will implement the suggested edits, update the basis for conclusions, and propose the updated Technical Bulletin for the Board’s consideration at the December 2023 meeting.    

Briefing Materials – Topic C