Crypto, AI and Tax Disclosure Changes: Preparing for What’s Ahead

In Weaver’s Accounting and SEC Update: Q3 2025 webinar, our professionals reinforced the breadth of change facing public companies on several fronts. Crypto assets are becoming mainstream balance sheet items while stablecoins are beginning to reshape global capital markets. AI governance is emerging as a critical board responsibility with implementation and oversight challenges comparable to cybersecurity. As new requirements for tax disclosures under ASU 2023-09 take effect, financial statements are set to become far more detailed and transparent. With these new requirements, public companies are likely to find that ASC 740 financial reporting will take more time and effort. And Q3 2025 marks the beginning of implementation of the One Big Beautiful Bill Act (OBBBA) with its extensive new tax reporting requirements.

The following summary captures the most important takeaways from the webinar, offering both practical considerations and forward-looking insights.

Crypto and Digital Assets for Public Companies

Corporate adoption gains momentum

The use of crypto and digital assets is no longer confined to early adopters. Today, more than 100 public companies report Bitcoin holdings on their balance sheets. Notably, MicroStrategy (now rebranded as Strategy B) has accumulated about 650,000 Bitcoin. The company has indicated that it plans to keep expanding, signaling its long-term corporate commitment.

This business trend mirrors recent government actions, including a federal executive order designating Bitcoin as a strategic reserve asset and a Texas law establishing a state-level Bitcoin reserve. Just in the past year, we have gotten more clarity from regulators. They are walking more in unison, trying to make various regulations fair and accommodating while allowing the industry to evolve and grow. This hasn’t happened in the past, and it’s a sign that crypto is becoming part of the mainstream.

New accounting rules under ASU 2023-08

ASU 2023-08, effective January 1, 2025, requires fair value measurement for most crypto assets that meet certain criteria, with changes in valuation running through the income statement. Before this guidance, crypto assets were treated as indefinite-lived intangibles. This means they could only be tested for impairment and written down, but never written up, regardless of market price. This treatment obscured economic reality and failed to reflect the liquidity and volatility of active crypto markets.

Under ASU 2023-08, companies must also provide robust disclosures: roll-forward tables, descriptions of accounting methodologies and detailed footnotes covering asset dispositions. For finance teams, this means closer alignment with market values but also increased volatility in reported results.

Operational considerations: custody and controls

Custody and internal controls are top priorities, especially for public companies subject to SOX compliance. Controllers must ensure secure custody arrangements, appropriate backups and strong access controls to prevent fraud or misappropriation. Audit and compliance teams should expect expanded testing and tighter scrutiny of processes related to digital asset holdings.

The growing role of stablecoins

Stablecoins are rapidly emerging as a major force in financial markets. With a current market capitalization of approximately $300 billion, stablecoins such as Tether and Circle are among the largest purchasers of U.S. Treasuries.

This has profound implications for both capital markets and global dollarization. Blockchain-based stablecoins provide access to dollars in regions historically underserved by the traditional banking system. The July 2025 GENIUS Act established a regulatory framework, placing stablecoin issuers under the oversight of the Office of the Comptroller of Currency (OCC) and the Federal Reserve.

Tier 1 banks are already piloting stablecoin custody solutions, with expectations that within the next decade, most major banks will offer stablecoin services to clients. Public companies should watch this space closely, as stablecoins may soon play an integral role in payments, remittances and treasury management.

AI Governance: A Board-Level Imperative

Why AI oversight belongs in the boardroom

Artificial intelligence (AI) has rapidly evolved from an operational experiment into a board-level strategic concern. Investors, regulators and other stakeholders are increasingly scrutinizing how companies deploy and govern AI. We are reaching a point where boards are expected to provide oversight comparable to that exercised over cybersecurity and financial reporting. Public companies, in particular, must recognize that AI governance is no longer optional; rather it is essential for maintaining stakeholder trust and regulatory compliance.

Proactive risk oversight is critical

The risks are tangible. Externally, from deep-fakes to other fraudulent uses, companies are affected in a financial, cultural and reputational capacity. Internally, AI misuse, such as employees relying on generative AI without proper oversight or training, may introduce errors or expose sensitive data that may lead to data leaks, compliance issues and flawed decisions.

While AI offers immense opportunities, it may also create new classes of risks that demand structured governance and updates to your risk assessment and related disclosures. There is a clear need for policies on AI use and proactive oversight is critical to managing AI’s growing impact on organizational risk. To integrate AI into enterprise risk reviews, practitioners should include such key questions as:

• Are we testing AI outputs for accuracy?
• Are we updating incident response plans for AI-driven threats?
• Are we mapping AI risks to existing enterprise vulnerabilities?

AI investment: Setting realistic expectations

From an investment perspective, AI is nearly universal. Most organizations are already committing resources, with many dedicating multi-million-dollar budgets to AI investments. However, ROI is not immediate. Early stages often involve costs for infrastructure, training and pilots, which may appear as expenses before benefits materialize. However, organizations investing strategically, particularly those allocating higher percentages of their budgets, are beginning to report meaningful returns in productivity, efficiency and innovation.

Boards should set clear expectations and ask what outcomes are we targeting and by when? KPIs, such as cost savings, revenue growth and risk reduction help track progress. However, equally important is acknowledging nonfinancial returns, such as improved decision-making speed or avoided losses from risk mitigation.

Boards and companies also need to consider the risk in standing still. If competitors use AI to cut costs or innovate faster, not making these investments means a company risks falling behind. The board’s role is to ensure AI investments are strategic, measured and disciplined — just like any other capital project.

Building governance frameworks

Boards should establish AI steering committees or charters that define principles of fairness, transparency and accountability. They should oversee management’s adoption of safeguards against bias, particularly in sensitive functions like hiring, lending and pricing. Compliance with existing privacy laws such as General Data Protection Regulation (GDPR) as well as emerging state and federal regulations, must be monitored closely.

Boards should ensure public statements are vetted for substance and aligned with actual capabilities. Balance ambition with realism. If AI is delivering results, share them — clearly and specifically. If it’s early days, say so. Investors value transparency over hype. If AI materially affects operations or risk, it may warrant inclusion in MD&A or risk factors. Boards should confirm that legal and IR teams are aligned on this. If you are using AI to support your close process or other significant financial reporting process, the risks will have evolved and this should be part of your disclosure. Have you reassessed your risk factors? How do they need to be updated?

Regulators have already taken action: the SEC sanctioned a firm for “AI washing,” or overstating AI capabilities in public statements and the FTC continues to police deceptive AI claims. In this environment, companies must ensure that public messaging about AI is accurate, evidence-based and consistent with actual capabilities.

Focus on internal communication

Without clear guidance, employees may adopt unauthorized AI tools or misuse approved ones, creating compliance risks. Boards should ensure management develops training programs, communication strategies and policies that explain not only which AI tools are permitted, but why. Highlighting early successes, such as accelerated financial closes, can help build trust, while also addressing workforce concerns about job displacement. Above all, AI should be framed as a tool to enhance human performance rather than replace it.

Regulatory actions and enforcement

AI governance will continue to evolve in step with regulatory actions. While no sweeping AI-specific regulations currently exist, federal agencies are issuing advisories and supervisory expectations around model risk management, audit trails and fair lending compliance. Here is a quick rundown of AI enforced, proposed and cancelled regulations:

• The SEC has taken a two-pronged approach. It published internal AI compliance materials and a use-case inventory, signaling that registrants should expect scrutiny of disclosures and internal controls. At the same time, in mid-2025, the SEC withdrew a set of proposed rules, resetting its agenda. That reduces immediate rule risk but keeps the spotlight on enforcement cases like the first AI-washing settlement in 2024.
• The FTC is the most active on consumer-facing AI. It has pursued enforcement against deceptive AI claims and is now issuing civil investigative orders to major chatbot firms on harms to minors and data practices. The clear signal: AI safety and deception are enforcement priorities.
• Financial regulators are taking a governance-first approach. Actions so far are advisories, inventories and supervisory signals rather than prescriptive rules. The themes of this guidance include model-risk management, bias testing, audit trails and fair-lending compliance.
• NIST continues to provide the AI Risk Management Framework, which agencies and firms increasingly treat as the baseline standard for responsible AI practices.

To stay ahead of regulators, companies and their boards should focus on governance, transparency and alignment with existing law. Steps that boards should take now:

• Inventory AI claims across filings, marketing and websites and scrub anything unsubstantiated
• Strengthen disclosure controls to ensure AI-related developments are accurately reflected in MD&A and risk factors
• Assess fiduciary duty in AI usage, especially where AI interacts with customers (e.g., pricing, recommendations)
• Stay educated; prioritize AI literacy through briefings or external advisors

Boards should expect AI governance to become a permanent agenda item, requiring ongoing education, monitoring and alignment with corporate strategy. They should treat AI oversight with the same rigor as cybersecurity or financial risk. Proactive governance now will position companies well for future regulation.

Tax Update: ASC 740 and Q3 Considerations

Expanded disclosure requirements under ASU 2023-09

For public business entities, ASU 2023-09 becomes effective for annual periods beginning after December 15, 2024, meaning calendar-year companies will need to comply in their 2025 10-K filings.

While the revised standard does not affect interim reporting, it significantly expands the level of detail required in annual income tax footnotes. Because of the effort that will be involved in complying with ASU 2023-09, there has been pushback in the business community about its adoption. So far, however, efforts to rescind it have not been successful.

For businesses, most of the effort will come in the form of disaggregating information in footnotes. Historically, companies disclosed effective tax rate reconciliations only at a high level. They typically combine state and local taxes into a single line item and provide minimal qualitative explanation.

ASU 2023-09 requires a tabular reconciliation in both percentages and dollar amounts, disaggregated into eight categories: state and local income taxes, foreign tax effects, newly enacted laws or rates, cross-border transactions, tax credits, changes in valuation allowance, nontaxable or nondeductible items and changes in unrecognized tax benefits (e.g. FIN 48). Any item impacting the effective rate by 1% or more must be separately disclosed.

State and local taxes must now be disaggregated qualitatively by jurisdiction if they comprise at least 50% of the total state tax impact. Companies must also disaggregate income and tax expense between domestic and foreign operations and disclose income taxes paid by jurisdiction when any single jurisdiction exceeds the 5% threshold. For multinational companies, this will require substantial effort, as historical disclosures will need to be recast for comparative periods.

This is what a footnote may look like today:

Statutory Rate	21%
State & Local Taxes (Net)	3%
Foreign Operations	1%
Valuation Allowance	-1%
Other	2%
Effective Tax Rate	26%

 

This is what a comparable disclosure might look like under ASU 2023-09:

Effective Tax Rate Reconciliation

Pretax Book Income	10,000,000
Category	Amount	% of Pretax Income
Statutory Federal Rate	2,100,000	21.00%
State & Local Taxes (Net)	200,000	2.00%
Foreign Tax Effects
Foreign Rate Differential A	105,000	1.05%
Foreign Rate Differential B	10,000	0.10%
Foreign B Valuation Allowance	(25,000)	-0.25%
Nontaxable/Nondeductible Items
Penalties	10,000	0.10%
Component II Goodwill	250,000	2.50%
Tax Credits	50,000	0.50%
Change in FIN 48 Liability	(75,000)	-0.75%
Effective Tax Rate	2,625,000	26.25%

 

As you can see, tax departments will need to provide detailed qualitative explanations for differences between statutory and effective rates, including country-specific impacts, valuation allowance changes and the effect of tax credits. Even large companies with robust tax footnotes will face significant procedural changes to comply with disaggregation requirements.

What qualitative disclosures will look like

Here are examples of what some qualitative disclosure may look like:

Example A (State & Local Taxes):

“The increase in our effective tax rate of 4.1% compared to the statutory federal rate is primarily attributable to state and local income taxes, net of the federal benefit. State A and State B together represent more than 50% of the state and local impact due to the proportion of our domestic operations located in those jurisdictions.”

Example B (Foreign Operations):

“The effect of foreign operations reflects a 1.1% decrease in our effective tax rate. This primarily relates to earnings in Country X, which is subject to a statutory tax rate lower than the U.S. federal rate, partially offset by withholding taxes on repatriated earnings from Country Y.”

Example C (Valuation Allowance Changes):

“The 3.6% increase in our effective tax rate relates to increases in valuation allowances on deferred tax assets, primarily attributable to net operating loss carryforwards in Country Z that are not expected to be realized based on current forecasts.”

The biggest challenge: Income taxes paid

The area companies are likely to struggle the most is “income tax paid.” Breaking this information down is likely to be a massive task for companies with multiple jurisdictions. It’s going to take time.

If you've ever paid attention to an income taxes payable account, it is often treated as a catch-all for entries without clear designation. Rolling an income tax payable account in and of itself, on an aggregated level, can be a difficult task. Ferreting out the payments to each state and foreign jurisdiction is going to require new effort.

Q3 tax provision considerations

With many tax returns filed in October, companies need to prepare for return-to-provision adjustments and reconcile differences between prior year provisions and filed returns. The recently enacted OBBBA also carries implications for Q3 reporting. Because it was signed into law in Q3, discrete recognition of certain impacts — particularly valuation allowance adjustments — will be required in the quarter’s provision.

In short, tax leaders should use the remainder of 2025 to prepare for expanded disclosures review and revise tax payable accounts and review the impacts of OBBBA. Starting early will help avoid year-end reporting challenges and minimize surprises during audit and SEC review.

Final Takeaways

Proactive steps for finance leaders

For finance leaders, the message is clear: proactive planning, disciplined governance and accurate communication are essential to staying ahead. By engaging with these developments now, public companies can strengthen compliance, build trust with investors and position themselves for long-term success in a rapidly changing environment.

Stay in Touch

Weaver’s accounting and tax advisors offer companies several ways to sharpen their focus on upcoming accounting and tax regulations.

Sign up for Weaver’s Quarterly Accounting and SEC Update webinars or watch on-demand.

To discuss your unique circumstances, we encourage you to contact us directly to schedule a consultation.

©2025