The 'first cryptocurrency accounting rules' in U.S. history officially came into effect on December 15, allowing companies to include unrealized gains and losses from held cryptocurrencies in their quarterly financial reports. It is expected that companies holding large amounts of cryptocurrencies, such as MicroStrategy and Tesla, will benefit.
The Financial Accounting Standards Board (FASB) established the first batch of accounting rules for cryptocurrencies last year, which will take effect for fiscal years beginning after December 15, 2024.
After the new regulations take effect, cryptocurrency companies and any other companies holding Bitcoin or Ethereum must record the 'fair value' of their cryptocurrency holdings, which is a measurement method used to present the latest value of cryptocurrencies, and changes in fair value will be included in net income.
Previously, the United States did not have specific accounting rules to guide companies on how to register and measure the cryptocurrencies they held.
In the absence of regulations, companies can only follow the accounting rules for 'Intangible Assets' when registering cryptocurrencies, recording them at 'purchase price' and must conduct 'permanent impairment' when the value declines. Only when selling cryptocurrencies can asset appreciation be recorded as profits.
However, companies betting on Bitcoin have long been dissatisfied with this one-way accounting treatment. Since the value of cryptocurrencies can fluctuate significantly, this means that any decline in the value of cryptocurrencies held on the balance sheet often has to be recorded as 'impairment loss' when the company publishes its financial reports, leading to reduced profits.
According to the new rules, companies must separately register their held crypto assets on the balance sheet as 'special items'. Although the new accounting method may bring fluctuations to related earnings, it allows companies to record the financial recovery brought by the rise in cryptocurrency prices.
It is worth noting that the cryptocurrency accounting rules do not apply to NFTs, stablecoins, and wrapped tokens.
"The first 'cryptocurrency accounting rules' in the United States officially come into effect! MicroStrategy and Tesla will benefit" This article was first published by (Block客).
