Mark-to-market crypto accounting: A guide for investors

Anyone who has followed crypto knows how fast the numbers can move. One shoutout from a celebrity can push the prices up, and another can wipe them out. For traders, that swing is part of the thrill. But for businesses or investors holding crypto assets, big swings create bigger problems: How do you measure and report the value of something that never stops moving?

Mark-to-market crypto accounting is one way companies can answer this question. Instead of holding coins on the books at the price you first paid, this technique updates the coin’s value to reflect the market you could sell into today. Financial statements become realistic as they show results that line up with what’s happening in real time. Showing up-to-date prices changes how investors read the balance sheet, how companies report earnings, and how quickly risks become visible.

This guide breaks down what mark-to-market means in practice and why it’s becoming central to FASB crypto accounting in 2025.

What’s mark-to-market accounting?

Mark-to-market (MTM) accounting values an asset at what someone would pay for it now, not what you originally paid. Let’s say you bought a coin for $1,000 last year. If that same token trades today at $2,500, MTM would say its value is $2,500. If the market drops to $700, your coin takes that drop too. 

This type of accounting is different from historical cost accounting. Under historical cost, you recognize the book value at the price you paid. Realized gains or losses are only recognized when you sell. Accounting this way keeps your books stable, but it also doesn’t recognize major unrealized gains in value.

MTM is already standard for many financial instruments, like stocks, bonds, and derivatives, that trade in liquid markets with reliable and observable prices. Crypto assets are joining this accounting trend, supported by crypto subledgers that track detailed blockchain activity and connect it to accounting systems like CoinTracker.

For currency-like in-scope crypto assets like Bitcoin (BTC) and Ethereum (ETH), generally accepted accounting principles (GAAP) in the United States now require companies to use fair value crypto reporting with changes in net income, while assets outside the scope (like NFTs) follow other relevant models. This switch started in December 2024, and is required of any company that holds fungible, secure crypto not created by the company itself.

2025

Crypto Tax
Guide is here

CoinTracker's definitive guide to Bitcoin & crypto taxes provides everything you need to know to file your 2024 crypto taxes accurately.

Get startedLearn more

How mark-to-market crypto accounting works

Applying GAAP fair value to crypto assets – under the Financial Accounting Standards Board (FASB)’s ASU 2023-08 amendment – can significantly reshape financial statements. Instead of waiting until coins are sold, organizations must revalue their holdings at the end of each reporting period. That remeasurement creates immediate gains or losses on paper, which then flow into reported earnings.

This approach shouldn’t be confused with the IRS’s rules for individuals, as the IRS still treats crypto assets as property, so MTM accounting doesn’t currently apply to non-corporations.

In practice, MTM happens in three steps.

Revaluing at fair value

The MTM accounting process starts by checking the going price of the asset. Say an entity bought 100 BTC at $30,000 each, spending $3 million total. If Bitcoin ends the year at $42,000, the holding is now worth $4.2 million. That new figure replaces the original purchase price on the balance sheet under FASB guidance and ASC 350-60 rules.

Recording unrealized gains or losses

Any change from the original cost is booked as an unrealized gain or loss. 

In the example above, the entity shows an unrealized gain of $1.2 million. If the price slipped to $25,000 instead, the same Bitcoins would be carried at $2.5 million, creating an unrealized loss of $500,000. 

These price changes appear in financial statements even though the coins never left the company’s wallet.

Balancing sheet and volatility impact

Constant re-marking makes financial reporting more accurate but also more volatile. Crypto asset prices frequently swing, and the entity’s results move with them. Investors can then have a clearer sense of value that changes as quickly as the market itself, allowing investors to make better informed financial decisions.

Benefits of mark-to-marketing for crypto

MTM accounting practices matter because they bring crypto assets reporting closer to what’s happening in the market. For investors, that means the numbers on the page match the reality of the price screen, not some figure locked in months ago.

Here are a few other key benefits of MTM you can expect:

• Transparency in reporting: When companies show their coins at the current fair value, the statements feel more honest. It’s no longer about what they once paid, but about what those digital assets could bring if sold now.
• Accurate market pacing: Crypto prices move quickly and in unpredictable ways. So, waiting until a sale happens to show gains or losses leaves historical data behind. By revaluing the organization’s crypto holdings at each reporting date, numbers stay fresh and the financial health of an entity is easier to judge.
• Consistency with established finance: Investors are used to seeing fair value numbers for stocks, bonds, and derivatives. Using the same approach for crypto assets removes the potential for confusion by putting digital assets on more familiar ground.
• Stronger investor confidence: Up-to-date values give investors and regulators more confidence in the organization. MTM accounting shows the company isn’t hiding behind outdated costs and are willing to reflect current risks and opportunities in their balance sheet.

Challenges of mark-to-market in crypto

While it’s obvious that MTM accounting brings clarity, you should also consider the obstacles. This is especially true for companies and investors, as these problems can affect how reliable or compliant their financial statements are.

Here are a few examples of common challenges in MTM crypto accounting: 

• Volatility and earnings swings: Crypto prices can fluctuate enough that a company’s results differ significantly from one week to the next. Those paper gains and losses don’t always match what’s happening inside the business, which makes the math harder for investors to get a sense of.
• Complexity in pricing across exchanges: Prices differ from one exchange to another, and liquidity shifts and transaction fees vary. Some tokens don’t trade widely or have reliable data, and if assets are bridged or moved across chains, the valuation complexity increases. Getting a defendable fair value means pulling in data from multiple sources, judging which one is the “principal market,” and applying accounting standards like ASC 350-60 carefully. That takes both effort and good valuation judgment.
• Tax and regulatory mismatches: Under FASB and GAAP, unrealized gains and losses on crypto assets show up in financial reporting. The IRS, however, usually only taxes when assets are sold or traded for other goods and currencies. This mathematical mismatch can be confusing for investors and companies. It’s also a reminder of the gap in GAAP versus IFRS crypto accounting, since U.S. rules now use fair value while the International Financial Reporting Standards (IFRS) treats most holdings as intangible assets.
• System readiness and operational burden: Many companies run legacy finance or ERP systems designed for intangible assets and traditional holdings. These systems may not support constant revaluation of crypto assets or the disclosures required under new accounting standards. This becomes an even bigger concern when considering staked assets, as they require tracking the original holdings and the rewards they generate. Adapting the old workflows to fit new ideas will take time and careful compliance with financial accounting standards.

See what your crypto assets are actually worth with CoinTracker

Even if you aren’t part of an organization holding cryptocurrencies, a clearer financial picture of your digital assets at fair value can help you understand what’s really in your wallets. 

With CoinTracker, you can link your wallets and exchanges to see how your holdings look on your balance sheet in real time. CoinTracker’s comprehensive updating and pairing with most major platforms makes checking your crypto assets easier. Come tax season, CoinTracker can also import this data into IRS-compliant forms for a crypto tax accountant or a service like TurboTax or H&R Block.

Stay informed and in control of your digital assets. Continue your journey with our comprehensive crypto glossary.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

What’s mark-to-market accounting for crypto?

Mark-to-market accounting is the practice of valuing digital assets at their current fair value instead of the original cost. This means that statements show what crypto assets are worth today, rather than what owners paid for them, and gives a more accurate picture of the entity’s position and financial health.

When does MTM crypto accounting take effect under GAAP?

New MTM crypto accounting guidance from FASB applies to fiscal years beginning after December 15, 2024. Keep in mind that under the same guidance, non-public entities – but not individuals – must adopt this system by December 15, 2025. Early adoption is allowed, so an entity can choose to apply the updated ASC and accounting standards earlier.

Does the IRS require mark-to-market crypto taxes?

No. For individuals, digital assets are still treated as property. Gains and losses are only recognized when you sell or exchange your tokens. So, MTM for tax purposes applies to certain securities and commodities, not crypto assets (under current rules).