Bitcoin and cryptocurrencies are poised for another surge in adoption by United States-based companies, thanks to a recent accounting rule change that enables businesses to more accurately represent the value of their crypto holdings.
Cory Klippsten, the CEO of the Bitcoin-exclusive exchange Swan Bitcoin, has emphasized the significance of this development.
He points out that companies like MicroStrategy and Tesla, both of which had to report impairment on their crypto holdings, can now provide a more precise reflection of the true value of their Bitcoin investments.
Klippsten believes that this change will have far-reaching implications, not only for companies primarily focused on Bitcoin but also for mainstream corporate adoption.
The Financial Accounting Standards Board (FASB) introduced the new rules on December 13, with an effective date of December 2024.
These rules enable companies to accurately represent the estimated market value of crypto assets on their accounting books by allowing them to record gains on these assets.
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Previously, crypto held by companies could only be impaired when its value decreased on the books, and any gains couldn’t be recognized until the crypto was sold, even if its value increased while held.
Klippsten envisions companies now being able to utilize Bitcoin as a “strategic financial asset” because they can report on both gains and losses.
This reporting feature is expected to foster greater adoption of cryptocurrencies within the corporate world.
Markus Thielen, head of research at Matrixport and author of Crypto Titans, emphasizes that this rule change highlights the growing corporate demand for incorporating cryptocurrencies into a firm’s accounting practices.
Digital assets are increasingly becoming integral to financial statements, and companies will have greater confidence in valuing their crypto holdings.
David Marcus, co-creator of Facebook’s Diem project, also expressed excitement about the rule change.
He noted that these new rules remove a significant obstacle that had been hindering corporations from holding Bitcoin on their balance sheets.
Back in September, following the FASB’s approval of these rules, Mark Palmer, senior equity research analyst at Berenberg Capital, highlighted that crypto-holding companies can now eliminate the negative optics associated with impairment losses under the previous rules.
This change is expected to encourage more companies to embrace cryptocurrencies as part of their financial strategies, marking a significant milestone in the integration of digital assets into the financial landscape.
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