Epochal turning point in the world of American corporate accounting: US accounting standard setters have unanimously voted to introduce new rules for the reporting of cryptocurrencies such as Bitcoin and Ethereum in company financial statements. The decision, which is expected to be published later this year , could pave the way for tech giants like Apple, Amazon and Google to include Bitcoin and altcoins on their balance sheets as early as 2024.
New paradigm in Bitcoin and cryptocurrency accounting
Under the new rules, expected by the end of the year, companies will be obliged to report their investments in cryptocurrencies to “fair value” , a valuation criterion that aims to represent the most recent value of an asset, also taking into account any rebounds after price drops. This is a significant change from current practice, which has been criticized by many companies and accountants for its rigidity.
Christine Botosan , a member of the Financial Accounting Standards Board (FASB), commented: “It’s not often that you can simultaneously reduce system costs and improve the usefulness of the information for decision-making purposes, so it was an easy decision to make “. The new standards will come into force from 2025, but companies will be able to opt for early adoption.
Jeff Rundlet , head of accounting strategy at Cryptio, lauded the decision, saying: “It’s a big step forward for the entire cryptocurrency market. I think it’s an important step towards mainstream adoption. This final proposal can help cryptocurrencies large companies that are afraid to hold crypto on their balance sheets due to the technical complexities.”
The Financial Accounting Standards Board (FASB) announcement has caused a stir in the crypto community, with many crediting it as a watershed in corporate adoption of Bitcoin and other cryptocurrencies. Swan Bitcoin, a leading voice in the sector, commented on Twitter on the significance of this change.
Because it is crucial for companies
Swan Bitcoin outlined the key points of the news on Twitter (X). The introduction of these new accounting rules is a crucial moment for companies that have invested or are considering investing in Bitcoin and other cryptocurrencies. The move to fair value valuation means that companies will be able to reflect the most up-to-date value of their Bitcoin assets, including taking into account any rebounds after price drops . This is a stark divergence from the previous lack of cryptocurrency-specific accounting guidelines in the United States.
Prior to this change, companies relied on practical guidance from the American Institute of CPAs. This guide treated Bitcoin similarly to intangible assets such as trademarks or copyrights, a method that did not allow for adjustments if the market recovered after a decline. The new approach to fair value reporting aims to provide investors with a more transparent and relevant view of a company’s financial position regarding its Bitcoin holdings.
With these new rules, both public and private companies will be required to adopt these standards for fiscal years starting after December 15, 2024. Additionally, they can opt to adopt the rule as early as 2024 (after the rule is published at the end of this year), setting the stage for corporate adoption of Bitcoin as a reserve asset in 2024.
Regarding disclosure requirements, companies will be obliged to make a separate entry for cryptocurrencies in their financial statements. This means they will have to return significant Bitcoin holdings and any associated restrictions in their supplementary notes for each reporting period. Additionally, they will be required to provide annual reporting of the opening and closing changes of their crypto assets, categorized by type.
The scope of the FASB (Financial Accounting Standards Board) rules is also known . They will cover assets on distributed ledgers based on blockchain technology and protected by cryptography. Currently, these assets are classified as intangible assets under US accounting rules and are fungible. However, it is important to note that non-fungible tokens (NFTs) , stablecoins, and wrapped tokens are not included in these rules.
The FASB’s decision to introduce these rules comes after a period of reluctance. Their change in stance can be attributed to the growing attention and investment in cryptocurrencies by major companies. The body has indicated that it will continue to monitor cryptocurrency markets closely, suggesting that more rules could be introduced in the future. This move is widely seen by industry insiders as the “right first step” towards mainstream adoption. Given the importance of these changes, it is not unrealistic to expect that tech giants like Apple, Amazon or Google may soon consider integrating Bitcoin into their balance sheets , further accelerating its mainstream adoption.