Accounting rule changes have turned Bitcoin from risky venture to corporate must-have – Bitwise

Bitwise main concern officer Matthew Hougan believes that companies adding Bitcoin (BTC) to their equilibrium sheets are nary longer an anomaly but a burgeoning megatrend that could alteration the crypto marketplace this year.

In a recent memo to clients, Hougan highlighted that MicroStrategy has been making the headlines with its assertive BTC accumulation strategy. The institution has acquired astir 257,000 BTC, much than each the Bitcoin mined past year, and plans to rise an further $42 cardinal to proceed its purchases.  

Hougan noted that the inclination goes acold beyond MicroStrategy. As of Jan. 14, 70 publically traded companies, including household names similar Tesla, Block, and Mercado Libre, clasp Bitcoin connected their equilibrium sheets. 

These companies clasp 141,302 BTC combined, portion backstage firms specified arsenic SpaceX and Block.one person disclosed astatine slightest 368 BTC successful holdings.

Regulatory shifts

According to Hougan, the game-changer is the Financial Accounting Standards Board’s (FASB) instauration of ASU 2023-08. This regularisation allows publically traded companies to people Bitcoin holdings to marketplace value, enabling them to grounds profits erstwhile Bitcoin’s terms rises.  

Previously, Bitcoin was treated arsenic an “intangible asset,” forcing companies to constitute down its worth if the terms fell but not allowing them to admit gains erstwhile it increased. 

With reputational risks declining and the accounting scenery much favorable, Hougan predicts an detonation successful the fig of companies buying Bitcoin. He estimates that the existent number of 70 could turn to hundreds, adjacent thousands, successful the adjacent 12 to 18 months.  

Additionally, Hougan argues that companies bargain Bitcoin for the aforesaid reasons individuals do. Some spot it arsenic a hedge against dollar depreciation, others arsenic a speculative plus to boost banal prices, and others arsenic a awesome of innovation to pull customers and talent.  

While motivations vary, helium believes the influx of firm request has the imaginable to thrust Bitcoin prices importantly higher, peculiarly arsenic large players similar Meta and others contemplate entry.   

Hougan concludes the papers by saying that retail investors don’t request to recognize wherefore each institution is buying Bitcoin. Instead, they should inquire themselves wherever this request is heading and what it means for the market.

The station Accounting regularisation changes person turned Bitcoin from risky task to firm must-have – Bitwise appeared archetypal connected CryptoSlate.