Michael Saylor Welcomes FASB Vote To Review Crypto Accounting Standards

michael saylor welcomes fasb vote to review crypto accounting standards

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michael saylor welcomes fasb vote to review crypto accounting standards 1

michael saylor welcomes fasb vote to review crypto accounting standards 1
Bitcoin (BTC) proponent and MicroStrategy CEO Michael Saylor has welcomed the United States Financial Accounting Standards Board (FASB) vote to review accounting rules for digital assets and commodities.

As it stands under current FASB guidelines — which is the source of authoritative Generally Accepted Accounting Principles (GAAP) — companies must report digital assets such as BTC as “intangible assets” on their balance sheets.

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This is due to crypto not meeting the agreed definition of “cash and cash equivalents, financial instruments, financial assets, and inventory” among the agency.

Since crypto is deemed as an intangible asset, companies are required to measure the assets at their lowest price during a given reporting period, which often results in “impairment losses” on balance sheets even if the firm hasn’t closed its position.

The FASB held a meeting to vote on the crypto accounting review earlier on Thursday. While it has yet to publish the results via its website, it appears that Saylor was watching the livestream, as he reported that the vote went through 7-0 and stated “congratulations to the Bitcoin community.”

Congratulations to the #Bitcoin community. This morning, by unanimous vote of 7-0, the Financial Accounting Standards Board (FASB) agreed to add a project to review Accounting for Exchange-Traded Digital Assets and Commodities.

— Michael Saylor⚡️ (@saylor) May 11, 2022

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“This is amazing. One step closer to making it easier for corporates to own Bitcoin on their balance sheet and account for it in a cogent manner,” responded Kraken’s director of growth marketing Dan Held.

While it is unclear when the review will take place or what the outcome could be, a shift to a definition resembling anything in the ballpark of “traditional financial assets” would make it a lot easier for firms to accurately report their holdings instead of reporting them at their lowest prices under intangible assets.

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For example, both Tesla and MicroStrategy have reported impairment losses on their BTC stashes at various quarterly reports over the past 12 months. This is despite not realizing a loss through a sale, and the price of BTC often indicates that their positions are in the green.

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