US accounting standard setters have approved new rules that will allow companies to report the fair value of their cryptocurrency holdings starting in 2025.
The new rules are expected to increase the transparency and attractiveness of Bitcoin and other digital currencies as a treasury asset for businesses.
Currently, companies that own or invest in cryptocurrencies must follow an implementation guideline that treats most cryptocurrencies as an intangible asset; This means they can only record the historical cost of their assets and lose value if the price falls. This accounting method does not reflect the true market value of crypto assets, which are often volatile and can recover quickly after a decline.
Under new rules unanimously adopted by the Financial Accounting Standards Board (FASB) on Wednesday, companies will have to report crypto assets at fair value, a measurement that captures the most current value of an asset.
This will allow companies to recognize both increases and decreases in the value of crypto assets and provide more relevant information to investors and regulators.
The new rules will apply to all types of crypto assets, except wrapped tokens, which are excluded from the scope of the standard.
The FASB ruled that the new rules will go into effect starting in 2025, but companies will have the option to implement them early. The board said it will continue to monitor the crypto market and take additional measures if necessary.
Following the development, MicroStrategy founder Michael Saylor posted the following Tweet stating that the development was positive:
“Fair value accounting is coming to Bitcoin. “This update to FASB accounting rules removes a major impediment to institutional adoption of BTC as a treasury asset.”
*This is not investment advice.
