Accounting
The lack of accounting standards is one of the biggest barriers preventing corporate investors from having exposure to digital assets.
Digital assets do not fit clearly into previous accounting standards, providing a lack of clarity of what the rules are. They are also subjected to onerous accounting requirements that can disadvantage digital assets and hinder growth, innovation, and investment.
Establishing robust accounting standards for digital assets to enhance transparency, consistency, and trust in financial reporting within this rapidly evolving sector.
The Policy Issues
Fair-Market Value Accounting
Fair-market value accounting for crypto assets refers to the financial practice of recording these assets at their current market price, reflecting real-time valuation in financial statements. This method ensures that the reported value of cryptocurrencies is consistent with the price at which they could be exchanged in an orderly transaction between market participants at the measurement date.
We strongly support fair value accounting for crypto assets, advocating for its adoption as it provides a transparent and accurate representation of an entity’s financial position. Set to be implemented in December 2024, this accounting practice is available for early adoption, offering organizations the opportunity to align with market dynamics and enhance financial reporting immediately.
Lack of Accounting Standards
The rapidly evolving digital asset sector, comprising cryptocurrencies, tokens, and other forms of digital value, presents unique challenges for the accounting profession, primarily due to the absence of established accounting standards. This gap makes it difficult for companies to accurately reflect the value and risks of digital assets in their financial statements, leading to uncertainty and inconsistency in reporting.
Recognizing the critical need for clarity and standardization, we have been at the forefront of advocacy efforts. The organization is actively engaging with policymakers, accounting standards boards, and industry stakeholders to develop and implement comprehensive accounting standards for digital assets. Our work aims to ensure that businesses can report their digital asset holdings transparently and consistently, fostering greater trust and stability in the market.
- Response to Proposed Amendments to PCAOB Rule 3502 on Contributory Liability Standards | November 2023
- Proposed ASU (Subtopic 350-60) Accounting for and Disclosure of Crypto Assets | June 2023
- Response to FASB Agenda Request | September 2021
- Response to FASB Digital Currency Agenda Request | June 2017
- What’s Next for SAB 121 Following Bipartisan Passage of H.J. Res 109 | May 2024
- Statement on Successful Passage of the Resolution to Nullify SAB 121 | May 2024
- Applauding Bipartisan Vote Supporting Nullification of SAB 121 | March 2024
- Celebrating Progress in Crypto Asset Accounting Standards | February 2024
- Statement on Join Resolution Introduced to Nullify SEC’s SAB 121 | February 2024
- Statement on FASB’s Long-Awaited Exposure Draft on Crypto Asset Accounting Rule | March 2023
Our Impact
We’ve made impactful strides in the industry, from releasing a key guide on proof of reserves to leading the charge to overturn SEC’s SAB 121.
Leading The Charge for Proof of Reserves
We’ve released the industry’s most comprehensive resource, our Practitioner’s Guide, aimed at making proof of reserves mandatory for all industry participants. This guide sets the standard for transparency and accountability, reinforcing our commitment to robust and reliable financial practices in the digital asset space.
Pioneered Fair Value Accounting for Crypto Assets
Successfully spearheaded the adoption of fair value accounting practices for crypto assets, providing a more accurate and transparent financial reporting framework.
Leading the Effort to Nullify the SEC’s SAB 121
The largest impediment to trusted custodian’s management of cryptocurrencies: we partnered with lawmakers on Capitol Hill to pass a bipartisan resolution to nullify SAB 121. Although it was vetoed, we are championing new solutions to lead the nullification effort.
Relevant Accounting News
