On Wednesday, the US body responsible for setting accounting standards took an important step forward for cryptocurrencies. Accordingly, the Financial Accounting Standards Board (FASB) took a unanimous decision to introduce new accounting guidelines.
Cryptocurrencies will report “Fair Value”!
cryptocoin.com As we reported, the FASB has taken the next step towards allowing companies to report cryptocurrencies at their fair value. This is an approach designed to reflect the most current value of assets. The previously prevailing model reflected only decreases, not increases in asset value, until the asset’s sale. The update introduces measuring crypto assets at fair value. Thus, it aims to capture both increases and decreases in value. In doing so, the FASB says it provides a more accurate picture of a business’s financial position.
The change also requires detailed explanations about the types and exchanges of crypto assets. The goal here is to reduce complexity and better adapt to investors’ needs. Companies will be required to apply these fair value rules for fiscal years beginning after December 15, 2024. Those who follow the calendar year will adopt them in 2025. However, it is possible for companies to immediately enforce these rules for the cryptocurrencies they own.
Before the update, accounting rules only reflected the decline in the value of crypto. BTC price. Source: CoinMarketCapSince 2017, the FASB has turned down three requests for rules for cryptocurrencies. However, the Board changed its stance as big companies like Tesla and MicroStrategy started investing in Bitcoin.
New rules will not cover NFTs and stablecoins
The new guidelines will specifically address cryptocurrencies that meet certain criteria for exchangeability and cryptography. However, Non-Fungible Tokens and stablecoins will not be included. While some organizations, including the Big Four accounting firms, have advocated the inclusion of ‘wrapped’ tokens that facilitate cross-chain swaps, FASB members have decided to wait for more market data before expanding the scope of the rules.
Bids first arrived on March 23, 2023. In response to stakeholder feedback, accounting for cryptocurrencies “must be a top priority for the Board,” according to the proposal document. it was said.
XRP lawyer: This is a very important move for cryptocurrencies!
Lawyer John Deaton, who represents thousands of XRP token holders in the US Securities and Exchange Commission (SEC) lawsuit, described the FASB accounting rules initiative as a very significant development at first glance. But the lawyer wants to see if companies like MicroStrategy will be open to mentioning cryptocurrencies on their balance sheets in the long run. In this context, Deaton comments:
On paper this is very important. We’ll see if it really opens the door for companies outside of MicroStrategy to hold BTC on their balance sheets. If you combine this with a spot ETF, the needle could move.
