FASB Approves Accounting Rules for Crypto Holdings: Increased Volatility but Improved Reporting for Companies.
Summary:
The Financial Accounting Standards Board (FASB) has approved rules for accounting for cryptocurrency holdings, which will take effect in 2025. The new regulations will allow companies to record financial recoveries from increasing crypto prices, but also increase volatility in their earnings. The changes will affect companies like Coinbase, MicroStrategy, and Tesla that hold significant amounts of crypto. Cryptocurrency will be classified as a line item under "intangible assets" in financial accounts.
The Financial Accounting Standards Board (FASB) has approved regulations for accounting for the fair value of cryptocurrency holdings held by companies. These rules, which will take effect in 2025, were unanimously agreed upon by the FASB. The FASB is responsible for setting accounting and reporting standards for organizations following US Generally Accepted Accounting Principles (GAAP). In March, the FASB requested comments on proposed changes to the FASB Accounting Standards Codification. On September 6, the proposal was discussed and voted upon. Fair value refers to the estimated price of an asset, taking into consideration its current market value and other decisive factors. In October 2022, the FASB made a "tentative" decision regarding fair value accounting for crypto assets. The new accounting method will allow companies with significant crypto holdings to record financial recoveries from rising crypto prices, but it will also increase volatility in their earnings. If desired, companies can immediately begin employing fair value accounting for their cryptocurrency. This rule change will affect not just crypto-native companies like Coinbase, but also investment firms and companies such as MicroStrategy and Tesla that hold large amounts of cryptocurrency. To accommodate these changes, cryptocurrency will now be classified as a line item under "intangible assets" in financial accounts.
Published At
9/6/2023 9:51:39 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.