Importantly, SAB 122 does not change the requirement for entities holding or otherwise safeguarding digital assets for others to evaluate whether they control those digital assets. In such cases, the entity is deemed the “accounting owner” of the digital assets and would be required to recognize the digital assets and a liability reflecting its obligation to return those digital assets to their legal owner on its balance sheet. Sections 3.2.60 and 4.3.10 of our Issues in Depth, Accounting and reporting for crypto intangible assets, provide guidance.

Accordingly, as long as Entity A is responsible for safeguarding the crypto-assets held for its platform users, including maintaining the cryptographic key information necessary to access the crypto-assets, the staff believes that Entity A should present a liability on its balance sheet to reflect its obligation to safeguard the crypto-assets held for its platform users.