An Update to Houlihan Capital’s July 2026 Review of ASU 2022-03
September 20, 2026
On September 9, 2026, the Financial Accounting Standards Board issued ASU 2026-03, Fair Value Measurement (Topic 820): Contractual Sale Restrictions, finalizing the proposal it introduced for public comment in July 2026. In our July write up, we examined that proposal and what it could mean for crypto funds holding post-TGE locked tokens. The standard is now final, and the questions facing fund managers, administrators, and auditors have moved from whether contractual sale restrictions belong in a fair value measurement to when and how to apply the new guidance.
What the Final Standard Requires
ASU 2026-03 reverses the position FASB took in ASU 2022-03, which directed reporting entities to exclude contractual sale restrictions from the fair value of an equity security, treating them as an attribute of the holder rather than the asset. Under the new standard, an investment company within the scope of ASC 946 that holds an equity security subject to a contractual sale restriction must incorporate the effect of that restriction into the fair value measurement, applying a discount that reflects what a market participant would actually pay for a security it cannot immediately sell.
The scope is specific. ASU 2026-03 applies to equity securities held by investment companies, not to every reporting entity and not to every type of asset. It also excludes restrictions reflected in the economics of another transaction, such as shares pledged as collateral. For equity securities held by entities outside ASC 946, the existing treatment of contractual sale restrictions remains unchanged. Investment companies subject to the new standard must also disclose the dollar amount of the discount attributable to the contractual sale restriction, in addition to the disclosures already required under ASC 820.
Effective Dates and Early Adoption
ASU 2026-03 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted on or after September 9, 2026, without waiting for a reporting period to begin. The standard is applied prospectively, with any resulting adjustment to fair value recognized in earnings on the date of adoption. Funds and their auditors have more than a year before the requirement takes effect, and the option to move sooner if that better reflects economic reality now.
What This Means for Locked Tokens
Houlihan Capital’s position, stated well before the July 2026 proposal and unchanged since, is that a market participant would not pay the same price for a token that can be sold today as for one that remains locked for months or years. ASU 2026-03, in its literal terms, applies to equity securities held by investment companies, and most tokens are not equity securities. What has changed with finalization is that FASB has now codified, rather than merely proposed, the underlying principle: that ignoring a contractual sale restriction can produce a fair value measurement that does not reflect how a market participant would actually price the asset.
That principle does not stop at the boundary of ASC 946’s definition of an equity security. It reflects how ASC 820’s broader market participant framework is meant to operate, and we believe it gives crypto funds a firmer basis than they had in July for applying comparable, well documented discounts to locked tokens, even in cases where the letter of ASU 2026-03 does not reach them directly. The factors we outlined in July remain the right starting point: the length of the remaining lockup, the mechanics of the vesting schedule (cliff versus linear), the liquidity and volatility of the underlying token, and whether the restriction runs with the asset or is specific to the current holder.
Recommended Next Steps
With the standard now final, funds and their advisors should consider four steps.
1. Document every position. Record the lockup period, release schedule, transferability limits, vesting conditions, and any acceleration provisions for each locked or vesting token, whether or not the fund is directly within ASU 2026-03’s scope.
2. Build a supportable discount. Calibrate the adjustment to the remaining lockup, the vesting schedule, the volatility of the underlying token, and the availability of hedging or secondary market alternatives, and be prepared to walk auditors and boards through the methodology.
3. Prepare for the disclosure investors will now expect. Even funds outside ASU 2026-03’s direct scope should expect auditors and investors to ask for the same transparency the ASU now requires of investment companies: the dollar amount of any discount attributable to a contractual sale restriction.
4. Evaluate early adoption. Funds structured as ASC 946 investment companies that hold restricted equity securities and/or locked tokens should discuss with their auditor whether adopting ASU 2026-03 ahead of the 2028 effective date brings their reported values into closer alignment with economic reality now, rather than in two fiscal years.
Houlihan Capital’s Track Record
Houlihan Capital has applied Level 3 valuation methodologies to assets unique to the cryptoasset industry since 2018, and has been recognized as the number one valuation provider three years running in the Accolade Partners Independent Survey for Crypto Fund CFOs. Our position on locked tokens has not changed with this final standard. It has been validated by it.
We are available to walk your fund, portfolio company, or client through what ASU 2026-03 means for specific token positions and disclosure obligations. For a conversation, contact Joe Brennan, Director of Valuation, at Houlihan Capital.
This material is provided for general informational purposes only and does not constitute accounting, legal, tax, or investment advice. FASB guidance is subject to interpretation, and readers should consult their own advisors regarding the application of ASU 2026-03 and ASC 820 to their specific facts and circumstances.
