Overview of Latest Developments
- The Financial Accounting Standards Board is moving closer to implementing new regulations on digital assets, with a vote scheduled for the coming week.
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The FASB will then decide whether or not to go ahead from its deliberation stage and draft a new proposal based on the advantages and costs of the proposed disclosure requirements.
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The US accounting body is aiming to have the regulations in place by the end of the first quarter. However, the timing and nature of any eventual regulations will depend on the nature of stakeholder feedback that is received, a spokesperson said in an email Friday.
Further Details:
The FASB made a monumental stride forward in its attempts to set up new accounting standards for cryptocurrencies back in October. It was then tentatively decided that it would be worthwhile to measure certain digital assets. This move could be the best solution to an accounting problem which has hindered some CFOs from putting digital assets on their balance sheets.
Some firms and certain financial report writers have criticized the current practice which usually treats cryptocurrency as an intangible asset.Under the present system, a company with bitcoins or other digital assets that depreciates in value will reflect this decrease in its reports but will not do the same if it increases in worth.
Finalizing the rules that represent that change in fair market value will take some time.The FASB is currently deliberating on the details of these new regulations since it pivoted and decided to prioritize the project back in May.
In December, the FASB also made another series of tentative decisions. Both private and public companies will be required to disclose their crypto gains and losses in net income “significant asset holdings,” along with data such as their actual value, the items being held and any restrictions. The board also requests that the information is reported on an interim or quarterly basis in financial statements.
The collapse of crypto exchange FTX in the past 12 months and the lack of financial controls detailed in its bankruptcy documents, which is similar to using emojis online to approve disbursements of funds, will heighten scrutiny from the accounting world. Ahead of the regulations. This year, CFO Dive notifications must be made.
