New FASB Rules Pave Way for Greater U.S. Corporate Crypto Adoption
Summary:
A recent change in accounting rules by the Financial Accounting Standards Board (FASB) may spur further cryptocurrency adoption among U.S. firms. Released on December 13 and effective from December 2024, the revised rules will allow companies to more accurately reflect the anticipated market value of their crypto assets in their accounting books. Experts believe this change could encourage more firms to hold cryptocurrencies like Bitcoin as a "strategic financial asset" and remove a principal hurdle that previously discouraged corporate crypto holding.
In the wake of a new accounting law adaptation, U.S. firms may be on the verge of a major move towards adopting Bitcoin (BTC) and other cryptocurrencies. Swan Bitcoin's CEO, Cory Klippsten, informed Cointelegraph that companies like MicroStrategy and Tesla, both of which hold Bitcoin and had to acknowledge a reduction in their holdings' value, can now present a more accurate representation of their Bitcoin investment's actual worth. The change is crucial and will likely encourage wider corporate acceptance, not just within companies heavily invested in Bitcoin.
The revised rules by the Financial Accounting Standards Board (FASB), released on Dec. 13 and effective from December 2024, let companies account for the anticipated market value of their crypto in the accounting ledgers more accurately by recording assets that have gained value. Earlier, a company's crypto was registered with impairment only - when its asset's value dropped on the books and couldn't be increased unless sold, despite its value possibly rising while in possession.
Klippsten suggested that with the ability to report value gains and losses, companies could use Bitcoin as a 'strategic financial asset,' which might promote broader acceptance. Markus Thielen, the head of research at Matrixport and author of Crypto Titans, suggested this rule change signifies notable corporate desire for incorporating crypto into business accounting.
Further, Thielen noted that digital assets are becoming a vital part of financial reports, and with these changes, companies can now confidently value their crypto holdings. This change is a clear affirmation that digital assets have become an intrinsic part of the financial sector.
Others such as David Marcus, the co-creator of Facebook's discontinued stablecoin project Diem, also showed enthusiasm for the shifted regulations. According to him, the new rules are a significant development that removes a principal hindrance for firms wanting to include Bitcoin in their balance statements.
Following the FASB approval on Sept. 6, Mark Palmer, a senior equity research analyst at Berenberg Capital stated that under the new rules, companies holding crypto could eliminate the negative impression resulting from impairment losses under the previously existing FASB rules.
Published At
12/14/2023 6:27:29 AM
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