- The Financial Accounting Standards Board is closing in on putting its plans for setting new standards for crypto accounting out for comment, with a vote on the matter scheduled next week.
The FASB is poised to take up whether to proceed from its current deliberations stage to drafting a proposed update after discussing the costs and benefits of the new disclosure requirements that it tentatively settled on last month, according an agenda for next week’s meeting on the matter.
The U.S. accounting standards setter is aiming to issue a proposed standard by the end of the first quarter but the timing of a potential final standard will depend on the nature of stakeholder feedback that the board receives, a FASB spokesperson wrote in an email Friday.
The FASB took a major step in its effort to set new accounting guidance for cryptocurrencies in October when it tentatively decided to make fair value the primary method for measuring certain digital assets. The move could pave the way toward resolving an accounting issue that may have held some CFOs back from putting digital assets on their balance sheets.
Crypto companies as well as some financial report preparers have been critical of the current practice which generally treats cryptocurrency as an intangible asset. Under the current system a firm that holds bitcoin or another digital asset that goes down in value reflects that drop in its reports but does not do the same if the value rises.
Finalizing standards that include that fair market value change will take some time. The FASB has been deliberating over the details of the new standards since it did an about-face and decided to prioritize the project in May.
In December the FASB made another batch of tentative decisions, determining that both private and public companies would be required to disclose crypto gains and losses within net income as well as “significant asset holdings” including details such as their fair value, units held and any related restrictions.The board is also calling for the information to be reported on in interim or quarterly basis in financial reports.
Some experts say the implosion of crypto exchange FTX last year and the absence of financial controls revealed in its bankruptcy filings — such as the use of emojis in an on-line chat platform to approve disbursements — will sharpen scrutiny of the accounting industry and its standards this year, CFO Dive previously reported.