FASB rules 'eliminate bad optics' that have prevented companies from using crypto: analyst

"The change should help MicroStrategy and other companies that own digital assets eliminate the bad looks created by impairments", analysts said. of Berenberg Capital.

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The U.S. Financial Accounting Standards Board's new crypto accounting rules will eliminate the 'bad optics' that plagued companies holding digital assets, analysts at Berenberg Capital say.

On September 6, the United States Financial Accounting Standards Board (FASB) approved new rules for cryptocurrencies regarding how companies report the fair value of their holdings on their balance sheets.

In a follow-up analyst note from Mark Palmer, senior equity research analyst at Berenberg, the analyst said the changes would be particularly beneficial for companies such as Microstrategy, which will soon be able to report their digital asset holdings every quarter without having to. realize impairment losses.

"This change should help MicroStrategy and other companies that own digital assets eliminate the bad looks created by impairments under the rules put in place by the FASB," he wrote.

Since beginning to accumulate Bitcoin in August 2020, MicroStrategy has accumulated $2.23 billion in cumulative impairment losses.

Furthermore, some of the quarterly reports released by the company over the past three years include significant writedowns on its BTC holdings, which reflect the decline in the price of the asset.

MicroStrategy impairment losses. Source: Berenberg Capital

This led to negative media coverage of the company and its reports, "giving the impression that the inherent value of the company had been negatively affected then that was not the case...