Skip to content
20230324_Blockchain_Generic_4-1200x675.jpg

FASB publishes new crypto rules that will let firms use fair-value accounting

The Financial Accounting Standards Board, a U.S. regulating body that sets general accounting practices, has published long-awaited standards it says will improve disclosure of certain crypto assets.

“The new standard responds to feedback from stakeholders of all backgrounds who indicated that improving the accounting for and disclosure of crypto assets should be a top priority for the Board,” FASB Chair Richard R. Jones said in a statement.

“It will provide investors and other capital allocators with more relevant information that better reflects the underlying economics of certain crypto assets and an entity’s financial position while reducing cost and complexity associated with applying current accounting,” he added.

The updated standards will allow firms to use fair-value accounting for certain crypto held on their balance sheets. Under the previous accounting rules dubbed the “indefinite-lived intangible asset accounting model,” companies had to use the original purchase price and then record cumulative impairment charges.

The new rules become effective for fiscal years beginning after Dec. 15, 2024, although companies will be permitted to adopt them earlier for financial statements that have not yet been issued. They apply to intangible assets that “do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets; are created or reside on a distributed ledger based on blockchain or similar technology; are secured through cryptography; are fungible; are not created or issued by the reporting entity or its related parties.”

Rules could reduce costs, complexity 

“In addition to better reflecting the economics of crypto assets, measuring those assets at fair value will likely reduce cost and complexity associated with applying the current cost-less-impairment accounting model for many entities,” the new guidelines state. 

MicroStrategy, the publicly traded software company best known for its bet on bitcoin, said earlier this year that it supported the proposal for the new standards. 

“Reporting crypto asset holdings under a fair value model, as proposed by the FASB, would enable us to provide investors with a more relevant view of our financial position and the economic value of our bitcoin holdings, which in turn would facilitate the ability of investors to make informed investment and capital allocation decisions,” the company said in May. 

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.



This article was originally published by a www.theblock.co . Read the Original article here. .

Related Blog