Accounting for USDC on Arc — the questions a controller has to answer

This guide doesn't give accounting or tax advice, and it won't tell a controller how to classify USDC, when to recognize gain or loss, or which standard governs a specific holding. It lays out the actual questions a controller needs answered before a business holds or transacts meaningfully in USDC on Arc — because several turn out to be genuinely unsettled, not just unfamiliar. Arc mainnet launches 16 September 2026; as of 2 Sep 2026 this is pre-mainnet groundwork.

Question one: does USDC even fall under "crypto asset" guidance?

This is the question a controller might assume has an easy answer, and per the accounting literature Built on Arc reviewed, doesn't. In the US, FASB's ASU 2023-08 — effective for fiscal years beginning after 15 December 2024 — introduced fair-value accounting for crypto assets, but only for assets meeting six specific criteria, including being fungible and *not* providing the holder "enforceable rights to underlying goods, services, or other assets." Whether a stablecoin like USDC falls inside or outside that scope depends on the legal structure of the claim it represents against the issuer — the standard doesn't name USDC or resolve the question explicitly. A stablecoin functioning as a straightforward redeemable claim on issuer reserves may fall outside the crypto-asset fair-value scope entirely and be accounted for as a different kind of financial asset — a determination for a qualified accountant reviewing USDC's actual structure.

Under IFRS, there's no dedicated standard for crypto or stablecoin holdings. Digital assets are generally accounted for under IAS 38 (Intangible Assets, typically at cost) or IAS 2 (Inventory, at the lower of cost and net realizable value) if held for sale — but professional guidance notes assets meeting the definition of a financial asset or instrument, which "certain stablecoins" may, can fall outside crypto-specific guidance entirely and into financial-instrument standards (IFRS 9) instead. The upshot: under both frameworks, the first question is not "how do I account for this crypto asset" but "is this actually a crypto asset for accounting purposes, or something else."

Question two: functional versus reporting currency

USDC is dollar-denominated by design. For a US entity with a dollar functional currency, that alignment is straightforward. For a multinational entity, or one with a non-dollar functional currency, holding USDC raises the same foreign-currency translation questions a dollar cash balance would — layered on top of the classification question above. A controller at a non-dollar entity should ask specifically whether USDC on Arc is translated like a dollar bank balance, or whether its classification changes the applicable approach. That answer is standard- and jurisdiction-specific.

Question three: gas as an expense

Gas on Arc — paid in USDC itself — is more straightforward: it's a transaction cost, most naturally an operating expense associated with the transaction it accompanies, similar to a payment-processing fee. What deserves attention is that gas is paid in the same asset being transacted, so a business needs a clean process separating the gas expense line from the principal amount moved, rather than letting the two blend in a raw ledger of USDC outflows — more an operational bookkeeping design question than an open policy one.

Question four: gain or loss on holdings

If USDC (or a specific holding structure) is classified in a way requiring fair-value or mark-to-market treatment, a business holding it across a reporting period needs a process for recognizing gain or loss — even though USDC is designed to trade near one-to-one with the dollar, small, real peg deviations do occur. Whether that flows through net income, other comprehensive income, or is treated as immaterial depends entirely on the classification determination from question one. This isn't answerable in the abstract, which is exactly why classification needs to happen first.

Question five: audit evidence from chain data

Here a blockchain-based rail genuinely offers something better than most traditional payment infrastructure: transaction history on Arc is public, immutable, and independently verifiable via a block explorer or indexed API, without depending on a bank statement as the sole source of truth. An external auditor can, in principle, independently verify on-chain activity rather than relying entirely on management-provided records. That said, this doesn't remove the need for controls around wallet custody and key management — the chain data proves what happened on-chain, not that the company's own recording of it, or its authorization controls, were sound.

What this all adds up to

Every question above lands in the same place: this needs a qualified accountant, engaged early, evaluating the exact structure of the holding, the entity's jurisdiction, its reporting standard, and its functional currency — not a general answer any guide could responsibly provide. Treatment genuinely varies by jurisdiction and standard, the classification question is unsettled enough that reasonable accountants could differ on the same facts, and getting it wrong at classification cascades into every other answer here. This is not accounting or tax advice.

Built on Arc is an independent directory. Arc is a Circle product; we are not affiliated with, endorsed by, or operated by Circle.

Sources: - Grant Thornton: ASU 2023-08 clarifies accounting for certain crypto assets - KPMG: Digital assets under IFRS Accounting Standards vs US GAAP - Circle: USDC Transparency