The rules of the American Accounting Standards Board reflect the fair value of institutional crypto assets

Crypto companies and institutions that hold crypto assets have received some good news about accounting. With regime changes in the United States, they can realistically record their crypto value.

The Financial Accounting Standards Board (FASB) finalized the new rules on December 13. The FASB is an organization that prepares accounting and reporting standards for US Generally Accepted Accounting Principles (GAAP). GAAP-standard financial reports are required of publicly traded companies in the United States.

Related: New crypto accounting guidelines could ‘smooth the way' to adoption

Under current practice, crypto is treated as an intangible asset that cannot be touched indefinitely, and is vulnerable to damage. This means that if they lose value during the accounting period, the value of crypto assets will be reduced on the books and the recorded value cannot be increased until the assets are sold, even if the value of the asset has increased before then.

The FASB has officially adopted fair value accounting for #Bitcoin for fiscal years beginning December 15, 2024. This update to accounting standards will facilitate the adoption of $BTC by international corporations as a form of treasury stock. https://t.co/4GOuji6cr0

— Michael Saylor⚡️ (@saylor) December 13, 2023

This is a disadvantage in a volatile crypto market, as it makes a company's assets appear to be worth less than their market value. The FASB stated in its Accounting Standards Update:

“Accounting only for increases and not for decreases, the value of crypto assets in the financial statements until they are sold does not adequately reflect (1) the underlying economics of those assets and (2) an entity's financial position. He said.

In the updated accounting standard, the fair value of crypto assets — the estimated market value — is measured at each accounting period and represented in the books of companies. FASB's update says the change provides more useful information and reduces accounting costs and complexity.

The final FASB decision will be a huge deal for #Bitcoin.

But what is FASB, and why should you care?

Time for corporate treasury

— James Lavish (@jameslavish) November 14, 2022

The FASB finalized the new rules after a review process that began last year. It had a call for comments in March and voted on the changes in September. The amended rules will take effect in fiscal years beginning after December 15, 2024.

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