The Financial Accounting Standards Board (FASB) has introduced a new Fair Value accounting rule for cryptocurrencies, effective from December 15, 2024. The rule aims to address gaps in accounting and disclosure practices for cryptocurrencies and improve transparency in financial reporting. Under the new rule, companies must measure their crypto holdings at fair value and update these valuations in every reporting period, reflecting gains and losses from market price fluctuations in their financial statements.
Previously, digital assets like Bitcoin were classified as indefinite-lived intangible assets, which did not allow for reporting gains unless sold. The updated standard also requires firms to disclose key details about significant holdings, changes during the reporting period, and any contractual restrictions on sales.
However, the rule does not apply to nonfungible tokens (NFTs) due to the challenges in estimating their fair value. The crypto community has welcomed this regulatory progress, believing that enhanced transparency and standardized reporting will drive institutional adoption globally.
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