Industry Overcomes Significant Hurdle in Obtaining Crypto Accounting Standards
January 24, 2022
- The Financial Accounting Standards Board finds crypto accounting standards are the top priority among stakeholders.
- The lack of authoritative guidance on accounting for digital assets is one of the biggest barriers to adoption.
- FASB to set its agenda in the coming months and the stage is set to finally get crypto accounting standards.
We need crypto accounting standards now!” Chamber founder and president, Perianne Boring on Mornings with Maria
The Financial Accounting Standards Board (FASB), which sets accounting standards for private and public U.S. companies, has not developed any accounting standards for digital assets. This has proved to be one of the biggest barriers to the adoption of digital assets.
FASB solicited an “agenda request” in September inviting comments from the public on identifying ‘pervasive needs’ to improve generally accepted accounting principles (GAAP), and inquiring about potential areas for future accounting standards setting.
The Chamber of Digital Commerce has been advocating FASB since 2015 on the need for accounting standards for digital assets. Previously, FASB has pushed back due to perceived lack of ‘pervasiveness’ of digital assets, and therefore did not allocate the resources necessary to develop authoritative guidance on accounting for crypto.
The Chamber of Digital Commerce led a significant response to FASB’s most recent agenda, providing input from the Chamber’s more than 200 members, as well as insights from Congressional leadership and other industry stakeholders. Our intention was to both educate FASB and its advisory staff on the pervasive impacts of digital assets, as well as to make a strong case for FASB to now undertake standards setting for digital assets.
If you are wondering what adoption looks like, over 52 million Americans already own cryptocurrencies today. It’s estimated that over 27% of millennials own some form of crypto. We are seeing more and more investors look to digital assets as a hedge against inflation. A survey from Fidelity Digital Assets found that seven in ten institutional investors from around the world, including advisors, family offices, pensions, hedge funds, and endowments, plan to buy or invest in digital assets within the next five years. Deloitte’s 2021 Global Blockchain Survey found that 76% of respondents believe that digital assets will either serve as a strong alternative to fiat currencies or outright replace fiat within the next 5 to 10 years.
Through the comment process, FASB received a significant response of 522 comment letters. Of these 522 responses, 445 (85% of the respondents) commented solely and exclusively on accounting standards for digital assets, providing feedback on the pervasive impact of digital assets and the need to prioritize standards setting. More than 50% of the respondents indicated that standard setting for digital assets should be considered as the highest priority for FASB.
The chart above provides an illustration of the areas that respondents identified as top priority, in order of most frequently identified to least frequently identified. The staff notes that these metrics include those respondents that stated that these areas should be the Board’s top priority in response to Question 2 of the consultation.
The above chart provides a visual representation of the respondents’ overall views on the top and low priority areas side by side, in order of most frequently identified to least frequently identified.
The Board will consider the impact of this feedback in upcoming meetings in setting scope and priorities in standard setting.
“We sometimes accelerate projects, particularly when there’s significant investor interest in an emerging issue,” FASB Chair Richard Jones said.
Accordingly, the Chamber of Digital Commerce will continue to work with FASB to assure this crucial standard setting is on the agenda and prioritized accordingly.
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