FASB Fair Value Standard for Crypto Goes Live

The new accounting update could be a boon for firms seeking bitcoin corporate treasuries.

New Accounting Standard Recognizes Crypto Gains

An accounting standard that addresses the fair value of crypto assets went into effect yesterday and may have a positive impact on companies seeking to establish bitcoin (BTC) treasuries by allowing firms to report both price gains and losses instead of just the latter.

Accounting Standards Update 2023-08 (ASU 2023-08) was issued by the Financial Accounting Standards Board (FASB), an independent non-profit organization that establishes accounting standards for companies that follow Generally Accepted Accounting Principles (GAAP).

Prior to this new standard, companies owning crypto assets could only recognize such assets at their historical cost (minus any impairments or loss in value) which led to inaccurate representations of asset values given the volatility of crypto assets and saddled companies with the burden of calculating complex impairment charges.

The new standard not only allows companies to report crypto holdings at fair value, but it also allows firms to report price gains as net income, making crypto corporate treasuries much more attractive. Previously, only losses had to be accounted for.

“This upgrade to accounting standards will facilitate the adoption of BTC as a treasury reserve asset by corporations worldwide,” said Michael Saylor, chairman of software analytics firm MicroStrategy which holds the world’s largest bitcoin corporate treasury.

The new standard doesn’t apply to non-fungible tokens (NFTs) or tokens created by the issuer. According to accounting firm Deloitte, wrapped tokens such as WBTC would also be out of scope.