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FASB Advocates Valuing Crypto Assets at Present Market Rates

Sep 7, 2023 at 10:09 am

The Financial Accounting Standards Board (FASB), the entity responsible for setting accounting principles in the United States, has taken a firm stance in urging companies to adopt "fair-value" accounting methods for their holdings of cryptocurrencies.

This announcement marks the introduction of a specialized accounting regulation in the U.S. specifically designed for the cryptocurrency sector. According to the FASB, companies will be required to employ a fair-value approach, which involves evaluating specific digital assets based on their current market prices.

In a meeting held on Wednesday, the board reviewed the feedback on this proposed change and authorized the creation of a final version of this new accounting standard. The implementation of this standard is scheduled to begin for fiscal years starting after December 15, 2024. The final wording is set to receive approval through a written vote before the end of the year.

The FASB, which operates under the oversight of the U.S. Securities and Exchange Commission (SEC), initially introduced this regulation in March. These proposed changes depart from the traditional practice of valuing these assets solely based on unrealized losses, a practice seen by the industry as a hindrance to broader adoption of cryptocurrencies. By formally incorporating cryptocurrencies into accounting protocols, companies will now include gains and losses in their quarterly financial disclosures.

Richard Jones, the chairman of the board, expressed his support for this initiative, stating, "I believe we heard overwhelmingly from investors who allocate capital based on the use of financial statements that this will provide them with better information to make their decisions, and so I am fully in favor of it."

The board is actively encouraging companies to consider early adoption of this new standard.

Michael Saylor, the founder and former CEO of MicroStrategy (MSTR), shared his perspective on this development via Twitter, stating that it "removes a significant barrier to corporate adoption of $BTC as a treasury asset."

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