FASB Introduces Accounting Standard Updates Allowing Businesses to Measure Held Cryptocurrencies at Fair Value

FASB Introduces Accounting Standard Updates Allowing Businesses to Measure Held Cryptocurrencies at Fair Value

FASB Introduces Accounting Standard Updates Allowing Businesses to Measure Held Cryptocurrencies at Fair Value

According to a report by CoinDesk, the Financial Accounting Standards Board (FASB) of the United States issued a guideline update on Wednesday (13th), allowing companies to recognize the “fair value” changes of their held cryptocurrencies. FASB is the organization that provides detailed instructions on how companies should report assets on their balance sheets. This latest measure will benefit companies that hold cryptocurrencies on their balance sheets, such as MicroStrategy. Under the current regulations, if the value of the held cryptocurrency is lower than the purchase price, companies must report a loss even if they haven’t sold the asset. Under the new rules, companies must report the fair value, cost basis, and classification of their held assets.

The updated document states that stakeholders who provided feedback to FASB expressed that the current guidelines do not provide useful information for investors or other parties. The document also states that the new rules received unanimous approval from the board and will take effect after December 15, 2024.

Michael Saylor, the founder of MicroStrategy, previously stated on the X platform that this move will make it easier for companies to adopt Bitcoin as a financial asset. He reiterated this point after the release of the FASB guidelines on Wednesday.

David Marcus, former head of Meta’s cryptocurrency and digital financial business and founder of Bitcoin Lightning Network development company Lightspark, commented that this move is actually a significant progress, eliminating a major barrier for companies holding Bitcoin on their balance sheets. He also mentioned that 2024 will be a milestone year for Bitcoin.