CFO Intelligence Magazine – Winter 2022


Mark D. Mishler,



More Companies are transacting in Cryptocurrency. Should yours be one of them?


Today, more companies are transacting in cryptocurrencies — or blockchain-tethered digital forms of money like Bitcoin and Ethereum that are neither issued by nor backed by a country’s government. Transactions encompass accepting cryptocurrency (also known as cybercurrency) for customer payments, paying suppliers in cryptocurrency,

or making cryptocurrency investments.


The word ‘crypto’ comes from the Greek word kruptós, meaning ‘hidden’ or ‘secret’ — and the U.S. government considers cryptocurrency to be crypto, not currency, so CFOs evaluating whether their company should transact in cryptocurrencies need to be aware of differences in the accounting and tax treatment of cryptocurrencies, compared to traditional currency. They should also consider such issues as cryptocurrency risk management and internal control considerations.


Organizations that accept cryptocurrency include the Dallas Mavericks, which accepts Bitcoin as a payment method for both game tickets and merchandise. In February 2021, Elon Musk announced that Tesla would accept bitcoin payments, and Tesla invested $1.5 billion in bitcoin. That summer, however, Tesla reversed its transaction policy — although not its investment — due to bitcoin-mining environmental concerns.



Potential advantages to accepting cryptocurrencies include:


  • Attracting new kinds of customers who view cryptocurrency transactions as being leading-edge and forward-thinking


  • Retaining existing customers in rapidly changing technology markets who may already utilize cryptocurrency


  • Attracting new types of capital markets made up of leading-edge and forward-thinking investors who may

        be attracted to companies using cryptocurrency


  • Transforming the market’s perception of the company as futuristic, creative, and flexible


  • Prompting creative thinking within the company’s management, including entering new customer markets
    or developing new innovative products


Cryptocurrency transactions may also offer:


  • Lower bank fees since there are no bank storage costs, and cryptocurrency transfer fees, if any, are low


  • An easier and faster way to move funds across country borders


  • No foreign currency value risk nor currency exchange costs. This is particularly significant with traditionally “weak” foreign currencies


  • Faster transactions because cryptocurrency transfers occur instantaneously and are accessible within minutes, compared to hours or days for traditional currency


  • Transactions are final because cryptocurrency transactions cannot be reversed, cancelled, or charged back


  • Frictionless payments, as the cryptocurrency payment mechanism is simpler and faster than traditional currency
    electronic transactions, since there are no bank or country government intermediaries



Disadvantages include:


  • Limited acceptance: even though Bitcoin, Ethereum, and other cryptocurrencies are rapidly becoming more accepted. Few entities currently exchange cryptocurrencies for real goods or services


  • Poor store of value because cryptocurrency volatility means that converting it back into a recognized currency may result in significant value swings, even on an intraday basis


  • Lack of regulation, because cryptocurrencies are a construct the private sector with no official government oversight or regulation. Thus, cryptocurrencies may be highly susceptible to exploitation and being used for criminal activities


  • Supply is potentially limitless, even though the number of Bitcoin production is supposed to be capped at 21 million units, and other cryptocurrencies are purported to have limited supply built into their protocols. Nothing exists, however, to enforce these limits nor to stop creating new kinds of cryptocurrencies, which could erode cryptocurrency value



Under current accounting guidance, transactions are to be expressed in currency form, and the underlying currency value should remain relatively constant over time. This value consistency does not presently exist with cryptocurrency, as Bitcoin’s recent valuation volatility demonstrates. The Financial Accounting Standards Board has not issued cryptocurrency guidance, although most accounting professionals and the American Institute of Certified Public Accountants classify cryptocurrency on the balance sheet as an intangible asset with an indefinite life.


Assets with an indefinite life require, at a minimum, annual impairment testing unless events require more-frequent

testing. Cryptocurrencies’ recent volatile valuation suggests

that frequent impairment testing is needed during a significant decline (which has occurred, too). If testing determines an impairment exists, companies holding cryptocurrency would recognize an immediate impairment loss through the income statement.


Worse, unlike accounting for traditional investment gains and losses, U.S. GAAP does not allow companies to recover cryptocurrency-related impairment losses nor increase their cryptocurrency asset

value if subsequent value increases. This intangible asset accounting treatment is different than traditional investment accounting, which generally allows companies to recover values for assets classified as

financial instruments.


Furthermore, cryptocurrency value changes will impact accounts receivable and payable measurements each reporting period, and will impact revenues from the contract inception date to the revenue recognition date.


For tax purposes, cryptocurrency is required to be remeasured at fair value whenever it is transacted, which will result in separate taxable gains or losses on the cryptocurrency value changes. This necessitates tracking the tax basis on cryptocurrency receipts, which adds a layer of complexity to the

recordkeeping process.






SIDEBAR:  Recognized companies that accept cryptocurrency transactions


Not all companies share Elon Musk’s concern with green energy and the carbon cost of producing cryptocurrency.

Yahoo listed the following large American corporations that accept Bitcoin as payment.


    Overstock – In early 2014, became the first major company accept Bitcoin.


    PayPal – PayPal created the market for modern digital payments, and began accepting Bitcoin payments in late 2014. PayPal did this to draw businesses to its payment platform, since Bitcoin transaction fees were far lower than the profit-killing 2%-3% charge for credit card transactions.


The Bottom Line

Cryptocurrencies can simplify payment transactions and shave forex costs, while potentially attracting new customers and investors. On the other hand, cryptocurrencies expose companies to significant valuation fluctuations and complex tax and accounting requirements. CFOs should evaluate their company’s specific needs and capabilities before deciding to embrace cryptocurrency for payments or investments. <