The coin in the treasury
Under IFRS 18, when a company holds bitcoin as a treasury reserve, do the gains and losses go in the operating category or the investing category?
The measurement question was answered seven years ago. In June 2019 the IFRS Interpretations Committee concluded that a holding of cryptocurrency is neither cash nor a financial asset. It is inventory under IAS 2 if the entity holds it for sale in the ordinary course of business, and otherwise an intangible asset under IAS 38. That agenda decision still stands. The IASB has no crypto project on its work plan; intangible assets held for investment are one of the topics in its broader Intangible Assets research project, which has not yet settled its direction.
IFRS 18 asks something the 2019 decision never had to. From 1 January 2027 every item of income and expense must sit in one of five categories, and operating profit becomes a required subtotal. A company that keeps part of its reserves in bitcoin now has to decide which side of that subtotal its crypto results fall on. IFRS 18 does not mention crypto, and nor does the Committee's September 2026 tentative agenda decision on the test that decides it.
Why the question arises
IFRS 18 classifies income and expenses by the asset that generates them. Unless an entity has a specified main business activity, it classifies in the investing category the income and expenses from three kinds of asset: investments in associates, joint ventures and unconsolidated subsidiaries; cash and cash equivalents; and other assets "if they generate a return individually and largely independently of the entity's other resources" (IFRS 18.53). Whatever is not classified in another category falls into the operating category, which is the residual (IFRS 18.52).
Crypto is not an associate, and the 2019 decision rules out cash. So everything turns on paragraph 53(c). If a treasury bitcoin holding generates a return individually and largely independently of the entity's other resources, its income and expenses are investing. If not, they default to operating.
The amounts are awkward because IAS 38 sends only part of the movement to profit or loss. Under the revaluation model an increase goes to other comprehensive income, except to the extent it reverses an earlier decrease on the same asset recognised in profit or loss (IAS 38.85). A decrease goes to profit or loss once any revaluation surplus on that asset is used up (IAS 38.86). Under the cost model a fall in value is an IAS 36 impairment loss. A gain on disposal goes to profit or loss but is not revenue (IAS 38.113). What reaches profit or loss is lumpy and tilted to the downside. That is the kind of item analysts want out of operating profit, and the kind IFRS 18 says the operating category does not exclude merely for being volatile (IFRS 18.B42).
What is clear
Several cases are settled, or nearly so.
Held for sale in the ordinary course of business. Broker-traders and others in this position apply IAS 2, as the 2019 decision says. The crypto is what they sell, so its results are operating.
Received from customers. Crypto taken as payment for goods or services and held only until it is converted arises from supplying those goods or services. IFRS 18.B48(b) does not mention crypto, but such a holding is in substance the kind of asset it describes, like the receivable it replaces, and IFRS 18.B49 puts the income and expenses from those assets in the operating category. This is the strong reading rather than a stated rule.
Investing in crypto as a main business activity. If the holding meets paragraph 53(c) and investing in it is a main business activity, the income and expenses go in the operating category anyway (IFRS 18.58). Whether that is so is a matter of fact, not assertion (IFRS 18.B33). The evidence includes whether a gross-profit-like subtotal that captures the crypto results is an important performance indicator (IFRS 18.B34–B35) and whether a segment comprises that single activity (IFRS 18.B36). The assessment is made for an individual asset or for a group of assets with shared characteristics (IFRS 18.B40), so a mixed treasury may need more than one answer.
Other comprehensive income is untouched. The categories apply only to the statement of profit or loss. Revaluation surplus movements are other comprehensive income that will not be reclassified (IFRS 18.88(b)), because IAS 38 transfers a realised surplus straight to retained earnings, not through profit or loss (IAS 38.87).
The contested ground is the ordinary corporate holder: a trading or service business that keeps bitcoin as a reserve asset, outside its main business, under a board-approved treasury policy.
Two readings
Reading A: an intangible is operating. Paragraph B49(c) lists amortisation among the operating items, and intangible assets are usually used together with an entity's other resources. Paragraph B46 names only debt and equity investments and investment property as typical 53(c) assets, and bitcoin is neither. The income listed first in B47 is interest, dividends and rent, which suggests a "return" means an income stream; bitcoin pays nothing. And the operating category is the residual, which B42 says includes volatile items.
Reading B: a treasury holding is an investment. The test in paragraph 53(c) applies to "other assets" and does not depend on which standard measures them. The return can be positive or negative (IFRS 18.B45), and the items in B47 include impairment losses, fair value gains and losses and gains on derecognition, so price movements count. A bitcoin reserve is not used with anything else to produce or supply goods or services, which is the test in B48. In its tentative agenda decision the Committee said paragraphs B45–B49 are applied in the context of paragraph 53(c), and that some interaction with the entity's other resources does not stop an asset generating a return largely independently.
Why reading A fails
Reading A mistakes the examples for the test. Paragraphs B46 and B48 both say "typically include". The Committee's tentative decision says the principle to apply is the one in paragraph 53(c), and the application guidance is read in that light. Software, a licence or a customer list fails paragraph 53(c) because it is used in combination with other resources, not because it is an intangible asset. B49(c) mentions amortisation because the assets B48 describes get amortised; it does not make intangibles operating.
The income-stream argument fails on IFRS 18's own example. Investment property includes property held only for capital appreciation (IAS 40.5). Such a building earns no rent, yet investment property is B46's typical 53(c) asset, and B47 counts fair value gains and losses and derecognition gains as its income. If capital appreciation is a return for a vacant building, it is a return for a bitcoin reserve.
The B42 argument proves less than it claims. B42 says volatility is no reason to take an item out of the operating category. It does not say volatility puts an item in. Classification follows paragraph 53, and a holding that meets 53(c) is investing because of what it is.
Reading A does leave one point standing: the test is about use, not label. Crypto that the business uses, to pay suppliers, as working balances on a platform it runs, or because customers paid with it, is used with the entity's other resources, and its results are operating. The same coin can land in different categories depending on what it does in the business.
There is a cross-check. IAS 7 classifies cash paid to acquire, and received from selling, intangibles and other long-term assets as investing (IAS 7.16(a)–(b)). Reading B puts the purchase and the later gains and losses on the same side of the line; reading A would show the purchase as investing and its losses inside operating profit. IAS 7 has its own definitions, so this is not decisive, but it points the same way.
At the time of writing we have not found published large-firm guidance that addresses crypto under paragraph 53(c).
A worked example: Corrib Analytics
Corrib Analytics Ltd, a Galway software company, reports under IFRS with a 31 December year-end and applies IFRS 18 from 1 January 2027. In 2025 its board approved a treasury policy allowing part of its surplus cash to be held in bitcoin as a long-term reserve. The bitcoin sits in a dedicated custody wallet, is never used to pay suppliers, and investing is not one of Corrib's main business activities. Corrib measures the bitcoin as a separate class under the revaluation model, using prices from an active market (IAS 38.72–75), and revalues at each half-year and year-end.
It bought 25 bitcoin in 2025 for €2,000,000. At 1 January 2027 they were worth €2,400,000, so a revaluation surplus of €400,000 sat in equity.
30 June 2027. The holding is worth €1,700,000. The €700,000 fall first uses up the €400,000 surplus in other comprehensive income. The remaining €300,000 goes to profit or loss (IAS 38.86).
September 2027. Corrib sells 5 bitcoin for €420,000 and pays €4,000 in exchange fees. Their carrying amount is one-fifth of €1,700,000, or €340,000. The gain is €420,000 − €4,000 − €340,000 = €76,000, recognised in profit or loss and not as revenue (IAS 38.113).
31 December 2027. The remaining 20 bitcoin are worth €1,500,000 against a carrying amount of €1,360,000 (€1,700,000 − €340,000). The 20 coins still held had absorbed €240,000 of the June loss (20/25 × €300,000), so the whole €140,000 increase reverses earlier losses and goes to profit or loss, not other comprehensive income (IAS 38.85).
€000 | Carrying | P&L | OCI |
|---|---|---|---|
Opening, 25 BTC | 2,400 | – | – |
June fall | (700) | (300) | (400) |
Sale of 5 BTC | (340) | 76 | – |
December rise | 140 | 140 | – |
Closing, 20 BTC | 1,500 | (84) | (400) |
Total comprehensive income from the holding is a loss of €484,000. It reconciles: €1,500,000 closing value plus €416,000 net sale proceeds, less €2,400,000 opening value. The revaluation surplus is now nil.
Before bitcoin, Corrib's 2027 revenue is €6,200,000, its operating expenses are €5,300,000 and its finance costs are €60,000. Under each reading, the statement of profit or loss looks like this:
€000 | Reading A | Reading B |
|---|---|---|
Revenue | 6,200 | 6,200 |
Operating expenses | (5,300) | (5,300) |
Bitcoin, net | (84) | – |
Operating profit | 816 | 900 |
Bitcoin, net | – | (84) |
Before financing and tax | 816 | 816 |
Finance costs | (60) | (60) |
Profit before tax | 756 | 756 |
Profit before tax is €756,000 either way, and so is profit before financing and income taxes, the IFRS 18 subtotal shown as "Before financing and tax" (IFRS 18.69(b)), at €816,000. Operating profit is not: €816,000 under reading A, €900,000 under reading B, a difference of €84,000 or about 9% of the higher figure. The half-year is worse. Under reading A, operating profit for the six months to June carries the full €300,000 loss, though the year ends with a net loss of only €84,000. IFRS 18 does not allow income and expenses to be offset unless a standard permits it (IFRS 18.44), but gains and losses from a group of similar transactions may be presented net, with separate disclosure where material (IFRS 18.B28). So whichever reading applies, Corrib shows one net line and discloses its components in the notes: the €300,000 loss, the €140,000 reversal and the €76,000 gain (IFRS 18.41–42).
The split also depends on how often Corrib revalues. Had it revalued only at the year-end, the sale would have produced a loss of €64,000 (€416,000 against a carrying amount of €480,000), €80,000 of surplus on the coins sold would have moved straight to retained earnings (IAS 38.87), and the December fall of €420,000 on the remaining coins would have split €320,000 to other comprehensive income and €100,000 to profit or loss. Profit or loss would then be a loss of €164,000 and total comprehensive income would still be a loss of €484,000. The revaluation timetable is itself a policy the auditor will test (IAS 38.75, 79).
On these facts Corrib applies reading B. The bitcoin is a reserve, it is not used in the business, and investing is not a main business activity.
Suppose Corrib also lets a few customers pay in bitcoin, which it sells within days. Those coins arise from supplying services and are in substance B48(b) assets, so their results are operating (IFRS 18.B48–B49). Separate wallets keep the two pools apart in the records and make the split easy to evidence.
What to do
Map each holding to its purpose. Held for sale in the ordinary course of business: IAS 2, operating. Received from customers, used to pay suppliers or held as platform balances: operating under B48. Held as a reserve or investment: investing under paragraph 53(c). Invested in as a main business activity: operating under paragraph 58.
Write the judgement down. A short paper covering the paragraph 53(c) analysis, why B48 does not apply, and the B33–B36 evidence on main business activity.
Segregate by purpose. Separate wallets, ledger codes and approvals let the classification follow evidence, not intention.
Disclose the policy and the judgement (IFRS 18.113(a), IAS 8.27A–27I).
Keep it consistent with the cash flow classification under IAS 7 and with any segment information.
Smaller related questions
Does the cost model change the answer? No. Bitcoin is usually treated as an intangible asset with an indefinite useful life, so it is not amortised but is tested for impairment at least annually (IAS 38.107–108), and increases above cost are never recognised. Impairment losses and reversals follow the category of the asset (IFRS 18.B47(e) for investing assets, B49(d) for operating ones).
What about stablecoins? The 2019 decision covered cryptocurrencies that do not give rise to a contract between the holder and another party. A fiat-backed stablecoin that gives the holder a contractual right to redeem against an issuer may instead be a financial asset under IFRS 9. That needs its own analysis before IFRS 18 enters the picture.
Staking rewards? Staking through a third party can first raise its own question of whether the entity still controls the coins. If it does, and the rewards are recognised, they are income generated by the asset and follow its category (IFRS 18.54(a)). Running your own validator, with your own hardware and staff, is a business activity in which the coins are used with other resources, which points to operating. When to recognise staking rewards at all is a separate unanswered question.
What if the purpose changes? If a reserve coin is moved into operational use, any income or expense arising on that change is classified in the category used immediately before it (IFRS 18.B62). Under the revaluation model the change itself rarely produces one; under the cost model it might, for example an impairment triggered by the move. Later results follow the new use.
Is "operating profit before crypto" an MPM? Under reading A, if Corrib tells investors about operating profit excluding bitcoin, that subtotal is a management-defined performance measure (IFRS 18.117) needing a reconciliation and tax effects in the notes (IFRS 18.123). Under reading B, operating profit already excludes it.
Why it matters for December 2026
IFRS 18 applies retrospectively, so the 2027 financial statements will present 2026 restated into the new categories. Corrib's 2026 crypto results need classifying now, on the same analysis. For a half-yearly reporter, the June 2027 interim report is where the new structure first shows, and in Corrib's case where the €300,000 loss first lands. The December 2026 financial statements must also disclose the expected effect of a standard issued but not yet applied (IAS 8.30–31), and a material crypto holding is part of that story. In the EU, IFRS 18 was endorsed by Commission Regulation (EU) 2026/338 of 13 February 2026, with the same effective date.
The Committee's tentative agenda decision on paragraph 53(c) is open for comment until 30 November 2026. Its analysis focuses on debt and equity investments. A preparer with a material crypto holding has a window to ask it to say something about non-financial assets.
What the auditor will look at
Evidence of purpose: the treasury policy, board minutes, wallet segregation and a transaction history that shows no operational use.
The classification analysis: the paragraph 53(c) and B48 reasoning, and the main-business-activity assessment (IFRS 18.B33–B36), tested against how management describes the business to investors.
The IAS 38 mechanics: an active market for the revaluation model (IAS 38.75), the same model for the whole class (IAS 38.72), surplus tracked per asset so the split between other comprehensive income and profit or loss is right (IAS 38.85–86), and disposal gains kept out of revenue (IAS 38.113).
Consistency: cash flow classification, segment information, restated comparatives, disclosures and any MPM reconciliation.
Existence and control: custody arrangements and evidence that the entity controls the keys. This is not an IFRS 18 matter, but no classification survives without it.
Work it through with our tools
Our IFRS 18 Transition Tool moves a real set of accounts from IAS 1 to IFRS 18: it classifies income and expenses into the new categories, builds the required subtotals, and helps you identify, reconcile and document your MPMs. It is free with a member account.
For the year-end work in Excel, our IFRS 18 Transition Pack takes the statement of profit or loss from IAS 1 to IFRS 18 line by line, restates both years, and drafts the transition note with the IFRS 18.C3 reconciliation and a disclosure checklist.
IFRS 18 in the Learning Hub: the categories, the specified main business activities and the new subtotals, with practice questions.
Year-End 2026 Reporting Update: our CPD course. Webinar 2 treats 2026 as the dress rehearsal for IFRS 18.
The Tipping Point: weigh and write up judgements like this one, where the standard leaves the answer open.
Disclosure Review: check the accounting policy and judgement disclosures before the auditor does.
Bitcoin did not need IFRS 18 to be awkward; IAS 38 had already seen to that. What IFRS 18 adds is a line that has to be drawn. For a coin that sits in a treasury wallet and does nothing but rise and fall, the standard's own test puts it below operating profit, in investing.
