FASB Approves New Accounting Requirements for Crypto Holdings

The Monetary Accounting Requirements Board (FASB) in the US has given unanimous approval to new accounting requirements for disclosure of cryptocurrency holdings. 

The FASB, a non-governmental entity overseen by the U.S. Securities and Alternate Fee (SEC), launched these guidelines in March, departing from the normal observe of valuing cryptocurrency property solely based mostly on unrealized losses. 

The implementation of those guidelines is scheduled to begin for fiscal years beginning after December 15, 2024, pending ultimate approval by means of a written vote.

This alteration was considered as a barrier to wider company adoption of cryptocurrencies.

Beneath the brand new requirements, firms shall be required to undertake a fair-value method, assessing sure digital property based mostly on their market buying and selling costs.

New Guidelines will Influence how Firms Report Crypto Holdings

The brand new guidelines set by FASB will impression how firms report their monetary efficiency, with positive factors and losses associated to cryptocurrencies changing into an ordinary a part of their quarterly revenue studies.

Richard Jones, Chairman of the FASB, expressed help for the transfer, noting that it’s geared toward offering traders with higher data for decision-making.

One notable facet of this growth is its potential to take away obstacles to the company adoption of cryptocurrencies as treasury property. 

Michael Saylor, the founder and former CEO of MicroStrategy, commented on this aspect, stating that it eliminates a major obstacle to company adoption of Bitcoin.

FASB Encourages Firms to Take into account Early Adoption

Whereas the change in accounting methodology will result in elevated earnings volatility for firms holding substantial quantities of cryptocurrency, it’ll additionally allow them to file monetary recoveries as cryptocurrency costs rise. 

This rule change will notably impression firms like Coinbase, funding companies, and main firms reminiscent of MicroStrategy and Tesla, which maintain vital cryptocurrency portfolios.

To accommodate these modifications, cryptocurrencies will now be categorized as “intangible property” in monetary accounts, reflecting their evolving position within the monetary panorama.