Mark Maurer from the Wall Street Journal states that the Financial Accounting Standards Board (FASB) has put forward new crypto rules for 2023. These regulations outline how companies should disclose and provide information about their cryptocurrency holdings to investors. Under the proposed rules, companies would be obligated to use a fair-value system to report the worth of their cryptocurrency assets.
Treat Digital Assets As Monetary Assets
The suggested change would enable companies to recognize profits and losses and classify digital assets as monetary assets rather than assets with an indefinite lifespan. Currently, companies handle cryptocurrency assets in a similar way to trademarks. They must evaluate the value of the asset at least once a year and reduce its value if it is lower than the purchase price.
Clear Information for Crypto
FASB aims to provide investors with transparent information regarding a company’s cryptocurrency holdings. However, the new rule will not be applicable to companies involved in creating or issuing new cryptocurrency tokens, as well as those using wrapped tokens. In August 2022, the FASB also decided to exclude nonfungible tokens and specific stablecoins from this project.
Small Number of Companies Affected
Chairman Rich Jones from FASB stated that the new rule will have a limited impact as it will only apply to a small number of companies. This is because only a few businesses outside the crypto industry actually hold cryptocurrency. For instance, companies like Tesla and MicroStrategy are among the few public companies that have cryptocurrency on their balance sheets, whereas many other companies possess traditional assets like stocks and bonds.
Outlook
FASB included this project in their schedule in May 2022 and intends to present a proposal by late March 2023. The public will have 75 days to provide their feedback. FASB authorities may officially implement the new crypto rules by the end of 2023.
