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FASB approves crypto asset standard

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Summary

The Financial Accounting Standards Board (FASB) approved their long-awaited standard for accounting for cryptocurrency assets during a meeting on Wednesday. The proposed standard requires companies to measure the changes in value of digital currencies like bitcoin held by companies and recognize changes in fair value in net income each reporting period. The standard is restricted to crypto assets, and not nonfungible tokens or "wrapped tokens". The amendments will be effective for fiscal years beginning after December 15, 2024, with the option for early adoption. FASB is also drafting the amendments to make the guidance clearer for not-for-profit organizations.

Q&As

What did the Financial Accounting Standards Board (FASB) approve during their meeting on Wednesday?
The Financial Accounting Standards Board (FASB) approved a cryptocurrency asset standard during their meeting on Wednesday.

What will companies with crypto assets be required to do under the new standard?
Companies with crypto assets will be required to measure those assets at fair value and recognize changes in the fair value in net income each reporting period under the new standard.

How did stakeholders respond to the new standard?
Stakeholders noted that the new standard requires a more fulsome disclosure package than might typically be the case.

What types of crypto assets are included in the new standard?
The new standard is restricted to crypto assets, and not nonfungible tokens and so-called "wrapped tokens".

When will the new standard take effect?
The new standard will take effect for fiscal years beginning after Dec. 15, 2024, including interim periods within those fiscal years for all entities. Early adoption will also be allowed.

AI Comments

👍 I'm glad to see that FASB is taking the initiative to set up a crypto asset standard and provide investors with better information to make their decisions.

👎 I'm disappointed that FASB has not expanded the scope to include wrapped tokens and NFTs. It would be more helpful to investors to have this information included.

AI Discussion

Me: It's about the Financial Accounting Standards Board approving a cryptocurrency asset standard. It looks at the changes in value of digital currencies like bitcoin held by companies and how they will need to measure those assets at fair value and recognize changes in fair value in net income each reporting period.

Friend: That's interesting. What kind of implications does this have?

Me: This could have major implications for the crypto market. It could help to legitimize cryptocurrency investments, as investors will now have a clearer understanding of how companies are valuing their cryptocurrency assets. It could also help to increase transparency and accountability, as companies will now have to disclose the fair value of their crypto assets in order to comply with FASB's standards. It could also lead to more investment in the crypto market, as investors may now be more willing to take the risk.

Action items

Research the different types of crypto assets and their associated risks.
Become familiar with the new FASB standards for crypto assets.
Consider the implications of the new standards for your organization's accounting practices.

Technical terms

FASB: Financial Accounting Standards Board - an independent, private-sector, not-for-profit organization based in the United States that establishes and improves financial accounting and reporting standards.
Exposure Draft: A document issued by a standards-setting body that outlines proposed changes to an existing standard or the introduction of a new standard.
Nonfungible Tokens (NFTs): A type of digital asset that is unique and cannot be replaced by another identical asset.
Fair Value Measurement: A method of valuing an asset or liability based on the price it would fetch in an open market transaction between a willing buyer and seller.
Wrapped Tokens: A type of cryptocurrency token that is issued on one blockchain but can be used on another blockchain.