How to Do Crypto Accounting for Companies With a Native Token

Companies that issue or hold a native token face accounting challenges that standard crypto tools don't fully address. From SAFTs and token minting to employee compensation and buybacks, each scenario requires specific journal entries and careful attention to classification.

This guide walks through the six core accounting scenarios for companies with a native token, including example journal entries for each.

Setting Up Your Accounts

To manage your token finances effectively, start by creating the following accounts:

Treasury Native Token Account

Tokens minted but not yet activated, typically tracked at a zero-cost basis.

Activated Native Token Account

Tokens actively circulating, recorded at fair market value.

Gain/Loss Account

Captures gains or losses from token valuation adjustments and transactions.

Deferred Revenue Account

For unredeemed utility tokens sold through SAFTs.

Token Equity Account

For proceeds from security token sales.

Unrealized Gain/Loss Account

For recording valuation adjustments of tokens that have not yet been sold or otherwise realized.

Scenario 1: Raising Funds via SAFTs

When raising funds through a Simple Agreement for Future Tokens (SAFT):

• If the native token is a utility token, record the proceeds as deferred revenue until the tokens are delivered and the promised services are fulfilled based on the whitepaper and agreement terms.
• If the native token is classified as a security, record the proceeds as token equity.

Example Entry, Utility Token (initial receipt):

Account	Debit	Credit
Cash	$500,000
Deferred Revenue (Liability)		$500,000

Recognizing Deferred Revenue from SAFTs

For utility tokens raised through a SAFT, revenue should not be recognized upon token generation alone. Recognize revenue in alignment with the delivery of services and milestones outlined in the whitepaper and sale documentation. These may include:

• Platform or product launch
• Access to features or functionality
• Utility of the token within the ecosystem becoming active

Example Entry, Partial Revenue Recognition upon Milestone Delivery:

Account	Debit	Credit
Deferred Revenue	$100,000
Revenue		$100,000

Repeat this process as additional obligations are fulfilled and the associated revenue is earned.

Example Entry, Security Token:

Account	Debit	Credit
Cash	$500,000
Token Equity		$500,000

Scenario 2: Minting Native Tokens

When minting tokens, no immediate accounting entries are recorded:

• Newly minted tokens remain off-balance-sheet or recorded in subledger systems.
• Token minting is typically disclosed in financial statement notes without financial impact.

Scenario 3: Paying Employees with Native Tokens

When compensating employees with native tokens, the accounting depends on whether there is an active market for the token.

If there is an active market price (token is live):

• Record an expense equal to the fair market value of the tokens issued.
• Credit the treasury token account with the same fair market value.
• Offset the gain from the zero-cost basis by crediting the Gain/Loss account.

Example Entry:

Account	Debit	Credit
Employee Compensation Expense	$10,000
Treasury Native Token Account		$10,000
Treasury Native Token Account	$10,000
Gain/Loss Account		$10,000

If there is no active market price (token is not yet live):

• Use the invoice amount or agreed compensation value to determine the number of tokens owed.
• No valuation adjustment or fair value recognition is needed since the token has no active price.

Example Entry:

Account	Debit	Credit
Employee Compensation Expense	$5,000
Treasury Native Token Account		$5,000
Treasury Native Token Account	$5,000
Gain/Loss Account		$5,000

Scenario 4: Buying Back Tokens

When repurchasing tokens from the market:

• Tokens are credited back into the activated native token account.
• Reduce cash or cryptocurrency (e.g., USDC, USDT) balance by the purchase amount.

Example Entry, Buying 1,000 Tokens at $2 Each:

Account	Debit	Credit
Activated Native Token Account	$2,000
Cash or Crypto Account (USDC/USDT)		$2,000

Scenario 5: Distributing Tokens to Investors

Once the token is generated and ready for distribution, tokens issued to investors under a SAFT are handled similarly to Scenario 3 (employee compensation). The tokens are issued from the treasury account at fair market value and offset against the zero-cost basis through a gain.

Example Entry, Token Now Has a Live Market Price:

Account	Debit	Credit
Token Issuance / Investor Distribution Expense	$100,000
Treasury Native Token Account		$100,000
Treasury Native Token Account	$100,000
Gain/Loss Account		$100,000

This records the issuance of tokens that were previously funded under a SAFT or similar pre-sale.

Scenario 6: Regular Valuation Adjustments

Periodically revalue tokens in treasury or activated accounts to fair market value:

• Valuation adjustments should be booked to an Unrealized Gain/Loss Account, as these are not realized through actual sales or transfers.
• The offsetting entry adjusts the carrying value of the token account.

Example Entry, Increase in Value:

Account	Debit	Credit
Treasury Native Token Account	$5,000
Unrealized Gain/Loss Account		$5,000

Example Entry, Decrease in Value:

Account	Debit	Credit
Unrealized Gain/Loss Account	$3,000
Activated Native Token Account		$3,000

Regulatory and Tax Considerations

• Maintain accurate, detailed transaction records for both compliance and transparency.
• Regularly consult with crypto tax and regulatory specialists to align practices with applicable laws.

Using Crypto Accounting Software

Use specialised crypto accounting software to automate:

• Token tracking and valuation.
• Generation of compliant, audit-ready financial reports.

Breezing connects directly with Xero and QuickBooks, and is currently the only tool that allows you to set custom pricing for your native token at different points in time, enabling automatic, real-time valuation updates, crucial for companies managing tokens with variable pricing milestones.

Video Guide

This video shows how to manually update token prices in Breezing for non-publicly listed or illiquid tokens.

Watch "Update Token Prices in Breezing for Non-Publicly Listed Tokens" on YouTube

What this means for your books

Native token accounting has more moving parts than most standard crypto scenarios. The key is getting the account structure right before transactions start flowing, and having a clear policy for each event type: minting, employee compensation, buybacks, investor distributions, and revaluations.

The journal entries above give you a working framework. For the account setup itself in Xero or QuickBooks, see the crypto balance sheet setup guide. If your company also raised via a SAFT and you are in Switzerland, the SAFT VAT guide covers the VAT treatment side of the fundraise. For US companies, the ASC 350-60 fair value rules apply to native token holdings on the balance sheet as of 2025. If token disposals are part of your activity, the HIFO and FIFO cost basis guide covers method selection in a corporate context.