New crypto accounting guidelines could 'pave the way' for adoption

Another milestone has been reached on the road to using fair value accounting for reporting crypto assets in the United States. United.

The move by the US Financial Accounting Standards Board (FASB) to allow companies to use "fair value" to account for their crypto holdings could be seen as another step towards wider institutional adoption of the cryptocurrency.

At a meeting on October 12, the FASB board made the decision to require entities to mark crypto assets at their "fair value".

The board's decision is "tentative" at this stage and could be changed at future board meetings as it continues to weigh its options.

The decision, if approved, will allow companies to regularly update their balance sheets with the fair value of crypto assets rather than referring to digital assets such as Bitcoin (BTC) as "intangible assets", where companies were required to measure assets at their lowest price during a reporting period.

Previous treatment of digital assets resulted in significant write-offs on balance sheets, even though their positions were currently in the green, with companies unable to regularly update the value of their holdings if the value was to increase.

Anthony Tuths, head of KPMG's Alternative Investment Tax practice, said the guidance could be optimistic for broader crypto adoption, adding that it would likely come into effect in 2023:

“The FASB has just paved the way for new accounting guidelines that will allow most cryptocurrencies to be accounted for at fair value. way for wider mainstream adoption.

Tuths added that not all digital assets would be eligible for the new accounting treatment. However, not fungible for...