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Crypto companies and institutions holding crypto assets have gotten some good news about accounting practices. They will be able to record the value of their crypto more realistically under rule changes in the United States. The Financial Accounting Standards Board (FASB) finalized the new rules on Dec. 13. The FASB is the organization that sets accounting and reporting standards for the U.S. Generally Accepted Accounting Principles (GAAP). GAAP-standard financial reports are required from companies that trade on public markets in the United States.Related: New crypto accounting guidelines could ‘smooth the way’ for adoptionUnder current practice, crypto is considered an indefinite-lived intangible asset, and so is subject to impairment. This means the value of the crypto assets is decreased on the books if they lose value in an accounting period, and the recorded value cannot be increased until the assets are sold, even if the value of the holdings goes up before then. 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.— Michael Saylor⚡️ (@saylor) December 13, 2023

This is a disadvantage in the volatile crypto market, as it could make a company’s assets appear to be worth less than their market value. The FASB said in its Accounting Standards Update:“Accounting for only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold does not provide relevant information that reflects (1) the underlying economics of those assets and (2) an entity’s financial position.” Under the updated accounting standards, the fair value — estimated market value — of crypto assets will be measured in each accounting period and represented in companies’ books. The FASB update said the change will provide more relevant information and reduce accounting costs and complexity.The latest FASB ruling will be a pretty big deal for #Bitcoin.But what’s FASB, and why should you care?Time for a Corporate Treasury — James Lavish (@jameslavish) November 14, 2022

The FASB finalized the new rules after a consideration process that began last year. It had a call for comments in March and voted on the changes in September. The updated rules will take effect in fiscal years that begin after Dec. 15, 2024. Magazine: How to protect your crypto in a volatile market: Bitcoin OGs and experts weigh in

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All Cryptos Insider © 2024. All rights reserved.