Crypto Asset Standards Addresses Valuation Discrepancies
Crypto asset firms and institutions holding digital assets will see improved asset value representation under updated accounting regulations in the United States.
On Dec. 13, the Financial Accounting Standards Board (FASB) finalized these changes, overseeing accounting and reporting standards within the U.S. Generally Accepted Accounting Principles (GAAP).
Currently, crypto is categorized as an indefinite-lived intangible asset, susceptible to impairment. This approach reduces asset value on the books during losses but does not augment the recorded value until the asset is sold, posing a disadvantage in volatile crypto markets for companies.
The Accounting Standards Update by FASB aims to rectify this inconsistency.
“Accounting for only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold does not provide relevant information that reflects (1) the underlying economics of those assets and (2) an entity’s financial position.”
The latest FASB ruling will be a pretty big deal for #Bitcoin.
But what’s FASB, and why should you care?
Time for a Corporate Treasury 🧵👇
— James Lavish (@jameslavish) November 14, 2022
