A prominent step towards cryptocurrency regulations was recently disclosed by the Financial Accounting Standards Board (FASB). The board proposed what could be the first U.S. specific accounting rule for cryptocurrency, endorsing the use of a fair-value approach to measure certain digital assets against their trade value in the markets.
This decision was made after a meeting held last Wednesday where the board reviewed feedback on the new proposal and gave their staff the go-ahead to draft the final version. The new regulation is scheduled to become effective for fiscal years starting after December 15, 2024. The FASB expects the final wording to be passed via written vote before 2024 ends.
While governmental oversight for the FASB is conducted by the U.S. Securities and Exchange Commission (SEC), the board itself operates independently. The rule that was proposed in March signaled a departure from the accustomed practice of using unrealized losses – as seen by the cryptocurrency industry – for marking these assets, a practice perceived more like a roadblock to broader crypto adoption.
The implications of this decision are significant. Prime among them is the shift to include digital currencies within the ambit of accounting rules. Consequently, businesses would be required to report the gains and losses from their cryptocurrency dealings in their quarterly income statements. This would hold a prominent space in business reporting and bring with it increased visibility and scrutiny.
In the words of Richard Jones, the board’s chairman, the move was in response to feedback from investors who use financial statements to inform their investment decisions. On hearing this news, he expressed his full support, stating that it would enable investors to make better-informed financial decisions.
The FASB is advicing companies to adopt the new standard early. Michael Saylor, founder and previous CEO of MicroStrategy, confirmed this outlook. Saylor viewed the introduction of this accounting norm as a scrap of a major barrier, therefore speeding up corporate adoption of BTC as a treasury asset.
The narrative remains to be whether this accounting change will bring about the anticipated rush in corporate crypto adoption or if the increased visibility and transparency will trigger a spasm of hesitancy. Regardless, bold moves like this signal a warming trend toward crypto integration into conventional financial practices.
Source: Coindesk
