A recent publication by the Financial Account Standards Board (FASB) details an update that aims to improve the framework for firms to disclose and account for their Bitcoin and crypto holdings.
This way, companies can more efficiently provide information about their overall financial position regarding crypto investments. FASB is an SEC-recognized independent organization that sets account standards for companies in the United States.
The ASU (Account Standards Update) will allow entities to disclose information about contractual sales, specific holdings, and changes in net income from their crypto assets. The new amendment is expected to go into effect beginning December 15, 2024.
Why Is This Important?
For a long time, companies that invested in Bitcoin experienced an accounting issue with regard to price volatility. There was no framework to recognize gains from a price increase. Now, with the new update, this issue has been resolved. Companies can now recognize such gains in their balance sheet.
As expected, the crypto community has reacted positively to the new ASU by FASB. MicroStrategy executive chairman, Michael Saylor, shared his positive reactions on X. MicroStrategy has been accumulating Bitcoin for a while.
FASB has officially adopted Fair Value Accounting for #Bitcoin for fiscal years beginning after Dec 15, 2024. This upgrade to accounting standards will facilitate the adoption of $BTC as a treasury reserve asset by corporations worldwide. https://t.co/4GOuji6cr0
— Michael Saylor⚡️ (@saylor) December 13, 2023
According to Saylor, the move by FASB to issue accounting frameworks for companies and institutions holding crypto assets will fuel Bitcoin adoption as more entities acquire BTC as a treasury reserve.
Meanwhile, Bitcoin has seen a price increase and a short retrace over the last two weeks, with several analysts suggesting that the bull run could be imminent. As such, the recent move from the FASB could positively affect the market as institutions troop to BTC.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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