Bitcoin proponent and MicroStrategy CEO Michael Saylor has welcomed the U.S. Financial Accounting Standards Board (FASB) vote to assessment accounting guidelines for digital belongings and commodities.
As it stands underneath present FASB pointers — which is the supply of authoritative Generally Accepted Accounting Principles (GAAP) — corporations should report digital belongings resembling BTC as “intangible assets” on their steadiness sheets.
This is because of crypto not assembly the agreed definition of “cash and cash equivalents, financial instruments, financial assets, and inventory” amongst the company.
As crypto is deemed as an intangible asset, corporations are required to measure the belongings at their lowest value throughout a given reporting interval, which frequently leads to “impairment losses” on steadiness sheets even when the agency hasn’t closed its place.
The FASB held a gathering to vote on the crypto accounting assessment earlier immediately, and whereas it’s but to publish the outcomes through its web site, it seems that Saylor was watching the stay stream as he reported the vote went by means of 7-0 and acknowledged “congratulations to the Bitcoin community.”
Congratulations to the #Bitcoin group. This morning, by unanimous vote of 7-0, the Financial Accounting Standards Board (FASB) agreed so as to add a challenge to assessment Accounting for Exchange-Traded Digital Assets and Commodities.
— Michael Saylor⚡️ (@saylor) May 11, 2022
“This is amazing. One step closer to making it easier for corporates to own Bitcoin on their balance sheet and account for it in a cogent manner,” responded Kraken’s Director of Growth Marketing Dan Held.
While it’s unclear when the assessment will happen, or what the end result could possibly be, a shift to a definition resembling something within the ballpark of “traditional financial assets” would make it rather a lot simpler for corporations to precisely report their holdings as an alternative of reporting them at their lowest costs underneath intangible belongings.
For instance, each Tesla and MicroStrategy have reported impairment losses on their BTC stashes at varied quarterly reviews over the previous 12 months. This is regardless of not realizing a loss by means of a sale and the value of BTC typically indicating that their positions are within the inexperienced.
Cointelegraph additionally reported yesterday that New York-based digital advertising and marketing and radio station firm Townsquare Media posted a Q1 impairment lack of $400,000 on its BTC holdings. This is regardless of with the ability to promote its place for $1.2 million revenue on the final day of Q1 on March 31.
Related: Michael Saylor assuages traders after market slumps hurts MSTR, BTC
BTC and MSTR tanking
If MicroStrategy was reporting immediately nonetheless the impairment loss can be precise. MicroStrategy reported the common buy value of its mammoth 129,218 BTC holdings at $30,700 in its Q1 report launched final week, suggesting the agency would put up a loss if it had been to promote immediately.
According to Forbes estimates, Saylor’s web value — which is basically comprised of BTC and MicroStrategy inventory (MSTR) – has dropped from $1.6 billion in March to only shy of $1 billion this week.
Data from Coingecko reveals that BTC has dropped 27.9% since March.1 to take a seat at $29,741 on the time of writing, whereas MSTR has dropped 63.7% to $168.20 inside that very same time-frame in keeping with TradingView.
Although Saylor has outlined on quite a few events that regardless of value, the corporate will proceed to purchase and hodl.