The Financial Accounting Standards Board published an Accounting Standards Update on crypto on Wednesday.
The long-awaited update requires certain crypto assets to be deemed at fair value.
“The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions and changes during the reporting period,” FASB wrote.
The amendment will go into effect Dec. 15, 2024.
“The amendments in the ASU improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income,” FASB wrote.
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The assets falling under FASB’s new criteria include those that meet the Board’s definition of intangible asset, are fungible, secured through cryptography, and are “created or reside on a distributed ledger based on blockchain or similar technology.”
“It will provide investors and other capital allocators with more relevant information that better reflects the underlying economics of certain crypto assets and an entity’s financial position while reducing cost and complexity associated with applying current accounting,” FASB Chair Richard Jones said in a press release.
FASB, sanctioned by the US Securities and Exchange Commission, gathered feedback on its proposed changes to how companies report crypto holdings back in May. The board, at the time, said that the accounting treatment as indefinite-lived intangible assets didn’t give investors informative data.
Companies, such as Marathon Digital, supported the change, telling Blockworks in June that it would “provide clarity.”
The Board approved the new rules back in September, with the finalization taking place in December.
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Source: https://blockworks.co/news/crypto-measured-at-fair-value