FASB: Crypto Must Be Recorded At Fair Value Starting 2025
Companies holding significant Bitcoin or Ethereum will soon record the full turbulence of their crypto investments. This is after the Financial Accounting Standards Board published the long-awaited accounting changes recently.
- Rules requiring “fair value” treatment take effect in 2025; earlier adoption is allowed.
- It will capture crypto’s extreme highs and lows instead of just downward writedowns.
- It comes after years of lobbying by crypto firms and investors.
On Wednesday, the body governing financial accounting standards in the U.S. unveiled its first guidelines specific to cryptocurrency assets.
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Corporate balance sheets must reflect crypto assets at their fair market value
The new regulations from the Financial Accounting Standards Board (FASB) state that corporate balance sheets must reflect digital tokens at their fair market values starting in 2025.
Rather than just registering downward plunges under current practice, this will enable firms to show gains and losses as crypto prices whipsaw, providing greater transparency.
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The new rules will also apply to corporations like Tesla and MicroStrategy that hold huge crypto positions. By capturing both spikes and swoons in real time, investors will gain a clearer picture of how virtual asset bets impact companies’ financial profiles.
The new rules will go into effect after December 15, 2024. The timeframe shows that it would be 2025 for the calendar year-end firms. The rules will apply to both public and private companies. However, companies can opt to comply with the rules prior to the deadline.
