Accounting standards board clears up crypto reporting

Companies can now share the late 2022 gut-punch misery of being a proud crypto owner publicly.

The Financial Accounting Standards Board (FASB) may have finally cleared up long-simmering confusion about how companies should account for the cryptocurrency assets on their books. The accounting-standard organization announced a tentative agreement to allow companies to use fair-value accounting for crypto assets.

Until now, there have been no clear, specific standards for reporting crypto assets. For accounting and reporting purposes, crypto assets like Bitcoin and other digital currencies have been treated as intangible assets, much like intellectual property or brand value. Intangible assets are much more difficult to accurately value and often don’t show up on the balance sheet.

Fair-value accounting allows companies to report the value of an asset based on a reasonable estimate of the sale price of that asset. The proposed standard would allow companies to report crypto as a financial asset and to record losses and gains on the balance sheet as they happen.

Companies have long clamored for clarity on reporting crypto assets, since intangible assets often only show up as losses on a balance sheet. This rule change would allow companies to show gains in crypto assets as well.

FASB still needs to vote on the proposal to make it an official reporting standard. A FASB spokesperson declined to comment to the Wall Street Journal about when that would happen.—DA

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