Today, the Chamber of Digital Commerce submitted comments to the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (Subtopic 350-60) Accounting for and Disclosure of Crypto Assets. For nearly a decade, the Chamber of Digital Commerce has advocated for setting clear accounting disclosure rules for crypto assets and this draft proposal gets us one step closer to the clarity our industry deserves.
We are extremely appreciative of FASB’s willingness to collaborate with the Chamber and our membership to get to this point and we commend the Board’s efforts on these proposals and look forward to getting these rules over the finish line.
“Clear and common-sense accounting and disclosure rules for crypto assets are essential to ensure transparency, protect investors, maintain market integrity, and promote the healthy development of the digital financial ecosystem,” said Perianne Boring, Founder and CEO of the Chamber of Digital Commerce. “
The proposed rules aim to better reflect the economics of the technology by measuring crypto assets at fair value, potentially reducing the cost and complexity associated with applying the current cost-less-impairment accounting model.
The proposed rules would apply to crypto assets that meet all of the following criteria:
- Meet the definition of intangible asset, which is defined as an asset that lacks physical substance.
- Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services, or other assets
- Are created or reside on a distributed ledger based on blockchain technology
- Are secured through cryptography
- Are fungible
- Are not created or issued by the reporting entity or its related parties.
What’s next?
The Financial Accounting Standards Board (FASB) follows several steps in its process of creating or updating accounting standards, including issuing an Exposure Draft. Now that the public comment period is closed, here are the steps FASB will take before updating the standards:
- Review of Comments: After the comment period closes, FASB reviews and analyzes all feedback received from stakeholders. This feedback often comes from a wide range of sources, including businesses, auditors, industry groups, and academics.
- Redeliberation: The FASB will consider all received comments and discuss them in public meetings. This process, known as redeliberation, can result in revisions to the proposed standard.
- Issuance of Final Standard: If the FASB decides to proceed after considering public comments and conducting redeliberations, it issues a final Accounting Standards Update (ASU). This update represents the official, authoritative standard that entities must follow.
- Implementation and Post-Implementation Review: After a new standard is issued, there is typically a period of time before it becomes effective, allowing entities to prepare for and implement the new guidance. FASB may also conduct a Post-Implementation Review (PIR) to assess whether the new standard is achieving its intended purpose.