The Financial Accounting Standards Board (FASB) released its long-awaited proposed accounting rules for reporting on certain types of crypto assets. This is a major development. For nearly a decade, the Chamber of Digital Commerce has advocated for setting clear accounting disclosure rules for crypto assets. The Chamber commends the FASB for their efficient work and look forward to getting these rules over the finish line.
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 FASB’s proposed accounting rules on crypto assets are a big step forward for mainstream adoption of crypto,” said Perianne Boring, Founder and CEO of the Chamber of Digital Commerce. “Measuring these assets at fair value provides a more favorable, equitable accounting treatment of these assets. This move highlights the desire of the crypto industry to be treated similarly to other forms and classes of investments.”
The proposed rules would apply to crypto assets that meet all of the following criteria:
- Meet the definition of an 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.
“This will also create greater certainty and transparency for investors into the fair value of crypto assets held by entities, as well as additional disclosures about the types of crypto assets held and changes in those holdings, while also encouraging adoption to diversify investment holdings,” Boring said.
The Chamber of Digital Commerce plans to review and provide comments on the proposed accounting rules by June 6. After the submission deadline, FASB will review comments received before a vinyl vote on the proposals.