The Financial Accounting Standards Board voted through a change to how digital assets are valued with the potential to accelerate institutional adoption.
Companies that hold cryptocurrency were delivered a long-awaited win on Wednesday after the U.S. Financial Accounting Standards Board voted through a key change to how digital assets are valued that has the potential to accelerate institutional adoption.
Bitcoin and its ilk aren’t explicitly covered under current accounting rules, so companies record them as “intangible assets” and are required to write down their value if the price drops below the purchase price. Gains can only be recorded if the assets are sold, confusing disclosures around long-term investments and weighing on investors’ view of company crypto holdings.
Nevertheless, the green light from the FASB delivers regulatory clarity to companies that hold digital assets on their balance sheet, such as electric vehicle-maker Tesla , broker Coinbase Global , or software group MicroStrategy . Crypto bulls also say it has the potential to increase treasury adoption of digital assets among companies that have been wary because of the bad look current accounting rules give holding crypto.
When the rules go into effect, companies with crypto holdings will provide much more clarity to investors about the value of the tokens in their treasury—instead of recording only the pain of losses. This will be meaningful for the handful of companies that own a significant amount of crypto.
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