The Financial Accounting Standards Board (FASB), the U.S. organization that details how companies should report assets on their balance sheets, said on Wednesday that changes in the “fair value” of crypto assets held by companies announced the latest version of the standard that will enable the recognition of
This move will benefit companies like MicroStrategy (MSTR) that include cryptocurrencies on their balance sheets. Under the existing rulebook, companies must report losses if the value of their cryptocurrency holdings is less than the purchase price, even if they haven't sold the assets. Under the new rules, companies will be required to report the fair value, cost basis and type of assets they own.
According to the latest document, stakeholders who provided feedback to the FASB said the existing guidance does not provide useful information for investors and other stakeholders.
“Considering only decreases, not increases, in the value of crypto assets in financial statements until they are sold depends on (1) the underlying economics of those assets and (2) relevant information that reflects the financial condition of the company. ”, the document said.
The new rules were adopted unanimously by the board of directors and are expected to come into effect after December 15, 2024, according to the document.
The section explaining how the FASB came to adopt the new guidance states that it received a significant amount of feedback supporting the new approach to digital assets.
“Stakeholder feedback, including respondents to the 2021 FASB Invitation to Comment (ITC) Agenda Consultation, indicates that improving the accounting and disclosure of crypto assets should be a top priority for boards. ”, the document states. “Nearly 500 respondents to the 2021 ITC requested that projects related to crypto assets be added to the Board’s agenda.”
The FASB has been working on updating its accounting rules for virtual currency holdings for the past few months, and the FASB indicated it intends to adopt new guidance in September.
Michael Saylor, founder and former CEO of MicroStrategy. I tweeted earlier There is an argument that this move will make it easier for companies to adopt Bitcoin as a treasury asset. he repeated Wednesday morning after the FASB guidance was released.
Bitcoin (BTC) price has risen more than 1% since the guidance was announced and is trading around $42,150 at the time of writing.
