When it Comes to Accounting Standards for Digital Assets, the Devil is in the Details, says Microstrategy’s Michael Saylor
June 18, 2021
Even as the market capitalization for digital assets has exploded to more than $2 trillion and the number of publicly-traded companies looking into carrying bitcoin on their balance sheets continues to increase, the accounting rules and standards have not kept pace, resulting in confusion, complexity, and reluctance among corporations to adopt digital currencies on a large scale.
The task of establishing these so-called Generally Accepted Accounting Principles or GAAP standards in the U.S. falls to the Financial Accounting Standards Board (FASB), an independent, private non-profit. All publicly-traded companies in the U.S. are required to follow these GAAP standards when filing their financial statements. Standards for publicly traded companies outside the U.S. are called the International Accounting Standards (IAS). Those are set by the IFRS Foundation and International Standards Accounting Board (IASB) and have been adopted by more than 120 countries including in the European Union.
Arcane as they may seem, both FASB and IFRS are two crucial organizations for publicly traded corporations in the U.S. and abroad that have or are looking to add digital assets to their balance sheets. But that’s easier said than done, as evidenced in recent comments by Microstrategy Founder and CEO, Michael Saylor, who delved into some of the reasons why current FASB standards are so troublesome for companies such as Microstrategy. Saylor was speaking at a Parallel event on June 17th hosted by the Chamber of Digital Commerce. His comments on FASB were part of a wide-ranging conversation with Brian Estes, the CIO and Managing Partner at Off the Chain Capital.
Since 2017, the Chamber has been engaged in working with both FASB and IASB to develop an appropriate accounting treatment for digital assets. You can read more about our efforts at the links below.