As the comment period for the proposed changes by the Financial Accounting Standards Board (FASB) regarding crypto asset reporting nears its end, companies supporting these updates are still requesting further guidance. Crypto exchange Kraken expects to see additional guidance related to stablecoins, wrapped tokens, and NFTs, while accounting giant Ernst and Young and bankrupt crypto lender BlockFi seek revisions.
Grayscale Investments called the current scope of the proposal “understandable and operable” in a Monday letter but added that “further identification of types of crypto assets may be required for accurate reporting.” Advocates claim the new standards would enable balance sheets to better reflect the true market value of digital assets and could encourage institutions to hold them. However, a lack of forthcoming guidance may hinder and dissuade new digital asset adopters.
The proposed changes would also bolster disclosure requirements to “provide investors with relevant information to analyze and assess the exposure and risk of significant individual crypto asset holdings.” While the hope is that these amendments will bring clarity, there are concerns that the Accounting Standards Update (ASU) won’t satisfy entities that go beyond holding assets like bitcoin or ether.
Several industry players are requesting additional guidance and clarification regarding various aspects of digital assets, including stablecoins, wrapped tokens, and NFTs. Ernst and Young, for instance, suggested that revisions be made to the language in the proposed guidance to ensure its applicability to certain wrapped tokens, which are becoming more common in practice.
BlockFi, which filed for bankruptcy last November, also submitted a letter on the proposed changes, emphasizing that “change is not easy but in this case, it is absolutely necessary.” The company requested more clarity around the proposal’s scope, which they consider to be unclear in its current form.
Grayscale Investments echoed these concerns in a Monday letter, pointing out that the definition of “enforceable rights” might require additional analysis. Furthermore, the company raised questions about the treatment of crypto assets locked up in smart contracts or other decentralized finance (DeFi) protocols.
The FASB is set to analyze and summarize all the comments and present them to its board at a future public meeting. It is expected that explicit accounting guidance for crypto assets will be finalized by the end of the year. The industry will be keeping a close eye on the outcome and the direction taken by the FASB in the final draft of the proposed changes.
Source: Blockworks
