coinedition.com
The Financial Accounting Standards Board (FASB) put forward a proposal to introduce new rules on cryptocurrency, especially on accounting and disclosure. According to the new rule, crypto exchanges and crypto-related firms are required to undergo specific accounting standards and other guiding principles.
Previously, in May 2022, the FASB voted to set specific rules on crypto accounting and disclosure, specifically on the cryptocurrencies such as Bitcoin and Ethereum, with the intention to provide more information to investors.
Christine Botosan, the FASB board member, commented:
This is pretty quick for us and this is a pretty big change. I’m really pleased with the transparency that this proposal will provide to investors.
Notably, crypto companies and investors were highly demanding such a regulation in the crypto industry, mainly because of the fact that the law would help understand the losses and gains clearly and immediately. It is noteworthy that for a long period, the crypto space lacked any such rules over accounting and disclosure.
Primarily, the Standards Board has decided to issue the proposal with the ultimate agenda to direct businesses to use fair-value accounting for digital assets including Bitcoin. The law also promotes evaluating cryptocurrencies as financial assets rather than temporal intangible assets.
Currently, there is a tendency to view crypto assets as indefinitely lived assets. The new law would necessitate companies to differentiate between intangible assets such as trademarks and digital assets such as cryptocurrencies.
Notably, only a few companies would be affected by the rule. The companies like Tesla and Block haven’t responded to the Board’s request. In contrast, the crypto firm MicroStrategy responded positively to the act.