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The Financial Accounting Standards Board (FASB) has confirmed the implementation of new crypto accounting rules, requiring companies to report their digital asset holdings at fair value at the end of each fiscal period, effective late 2024. The amended rules, published by the agency after unanimous voting, will bring significant changes to financial reporting practices.
Key Points:
- Companies will now be required to report gains and losses from their crypto holdings in income statements, reflecting the most current asset values.
- The existing rules, which only allow reporting at original cost and impairment loss, have faced criticism for not capturing the full spectrum of value changes.
- The amendment will take effect for all public and private companies in the fiscal year beginning after Dec. 15, 2024, with the option for early adoption.
- The new requirements will encompass all cryptocurrencies, excluding NFTs, stablecoins, and wrapped tokens from the scope.
- This marks the first time the FASB has introduced a specific U.S. accounting rule addressing the measurement and reporting of digital asset holdings.
Implications:
- Companies with substantial crypto holdings, including Tesla, MicroStrategy, and Marathon Digital, are expected to be significantly affected by the new rules.
- Analysts anticipate that the changes could potentially encourage corporate adoption of cryptocurrencies by removing a significant reporting impediment.