Michael Saylor joyous at FASB decision to review crypto accounting rules

The Chief Executive Officer of MicroStrategy and Bitcoin maximalist Michael Saylor has expressed excitement astir the U.S. Financial Accounting Standards Board (FASB) decision to reappraisal rules for crypto.

Congratulations to the #Bitcoin community. This morning, by unanimous ballot of 7-0, the Financial Accounting Standards Board (FASB) agreed to adhd a task to reappraisal Accounting for Exchange-Traded Digital Assets and Commodities.

— Michael Saylor⚡️ (@saylor) May 11, 2022

FASB to reappraisal crypto accounting framework

The existent FASB guidelines supply that companies should study integer assets and commodities arsenic “intangible assets” connected their equilibrium sheets. This is due to the fact that cryptocurrencies don’t conscionable the modular explanation of “cash and currency equivalents, fiscal instruments, fiscal assets, and inventory.”

The regularisation means that companies similar MicroStrategy, which has astir of its assets successful Bitcoin, can’t study crypto arsenic a tangible plus connected its equilibrium sheet. Companies holding intangible assets indispensable measurement them utilizing the lowest terms wrong the reporting period.

This reporting modular usually results successful impairment losses for companies holding crypto adjacent if the steadfast maintains its position. MicroStrategy recorded implicit $800 cardinal successful impairment losses owed to the rule. In the archetypal 4th alone, the steadfast reported an impairment nonaccomplishment of implicit $170 million.

Given that the FASB is yet to denote the determination officially, the reappraisal day is unclear. There’s besides nary assurance of the outcome.

But adopting a antithetic acceptable of rules that applies explicitly to cryptocurrency alternatively of accepted concern standards volition marque it easier for companies holding crypto to study much accurately.

Crypto clang leads to impairment losses for organization holders

The show of the crypto marketplace successful the past mates of months means that astir Bitcoin holding companies person reported impairment losses connected their assets.

However, these companies, including Tesla, person not made immoderate losses done income and are usually inactive astatine a profit.

A bully illustration is Townsquare Media. The New York-based institution reported an impairment nonaccomplishment of $400,000 connected its BTC successful the archetypal quarter; however, it sold its presumption for a $1.2 cardinal nett connected March 31.

For MicroStrategy, Bitcoin’s accelerated driblet successful worth to $28,000 means the institution present has existent impairment losses. In its Q1 report, it stated that the mean acquisition terms of its BTC holding is $30,700.