Bitcoin breaks through $107,000 new high, why is the newly effective cryptocurrency accounting standard a big advantage for BTC?

The Financial Accounting Standards Board (FASB) in the United States officially implemented the accounting standards specifically for cryptocurrencies on the 15th of this month. According to this latest rule, in the future, U.S. companies holding cryptocurrencies will be able to record their digital assets, such as Bitcoin, in their financial reports at market fair value.

What changes after the first cryptocurrency accounting standards come into effect?

Previously, the U.S. government did not establish specific accounting standards for cryptocurrencies to guide companies holding cryptocurrencies on how to record and measure them on their balance sheets. Therefore, generally speaking, these companies could only classify cryptocurrencies as intangible assets, which meant that when registering, they could only calculate the cost based on the 'purchase price'.

At the same time, for these companies, if the price of the cryptocurrencies held on their balance sheets falls, they can only perform impairment. Only when they decide to sell the cryptocurrency can they register the assets in a profitable manner.

As the publicly traded company with the largest amount of Bitcoin, MicroStrategy has previously complained to the U.S. Securities and Exchange Commission (SEC) that such accounting standards are not beneficial for companies and investors, as the impairment-only accounting standards do not allow the board and investors to fully assess cryptocurrency investments.

However, now that the new accounting standards have come into effect, companies can begin to classify the cryptocurrencies they hold as special projects, allowing them to record them separately on the balance sheet and calculate them at fair value. This means that these companies can also include the gains from the increase in cryptocurrency prices in their net profit. For companies like MicroStrategy that invest in Bitcoin or Ethereum, this can present their cryptocurrency investment income more accurately in financial reports.

Bitcoin breaks through $107,000 to set a new record

After Bitcoin set a historical high of $106,660 on the 16th, it surged again at 0:30 am today (17th), reaching a maximum of $107,796, setting a new historical high. At the time of writing, it has slightly pulled back to $106,020, with a 24-hour increase of 0.51%.