The U.S accounting authority, FASB, has permitted companies wanting to use cryptocurrencies, should employ a fair-value accounting system when keeping stock of assets on their books. The new Crypto Accounting Guidelines by FASB paves way for the acceptance of cryptocurrency accounting by companies.
Before this decision, companies often lacked a specific way to disclose their crypto assets. As a result, they would classify them as Intangible Assets.
Crypto Accounting Guidelines: A New Way Forward
The decision if effective will provide much welcome relief to the companies, who found it rather difficult to keep updated records of their crypto holding. They could only use the lowest value of the currencies during the time of declaring their assets.
With the fair-value accounting system in place, firms holding cryptocurrencies can now treat them as any other financial assets and can now immediately recognize any profit or losses occurring from such financial holdings.
The Accounting Authority, FASB, has not included Non Fungible Tokens and stablecoins in the new accounting system. Their treatment will follow the previous guidelines.
As per M. Brooks of Coinledger, this new decision was long overdue but much welcomed.
After years of requests from investors to look into new regulations for accounting the FASB finally relented and included it as a priority in its agenda after the huge capitalization of crypto assets in the market.
Brooks says that the new regulation will help companies report with much more accuracy, their holding of cryptocurrencies in their financial statements.
Investors and companies, holding cryptocurrencies have been asking for clarity for the purpose of proper Crypto Accounting Guidelines for their holding of crypto. They even suggested the FASB consider crypto as any other foreign currency.
According to one expert, companies will be more likely to include this currency on their books, now that new Crypto Accounting Guidelines have been set.