FASB Vote Paves the Way for Crypto Accounting Changes

Michael Saylor, the MicroStrategy CEO and a staunch Bitcoin enthusiast, has expressed his excitement following the unanimous decision by the Financial Accounting Standards Board (FASB) to review the current accounting rules surrounding digital assets. As it stands, companies are stuck with treating cryptocurrencies like Bitcoin as ‘intangible assets,’ a label that’s less appealing than it sounds.

The Intangible Asset Quagmire

This term, ‘intangible asset,’ sounds fancy but effectively means that companies must report their Bitcoin at its lowest value during a reporting period. This is akin to saying, ‘I bought a fancy cake, but I have to record it as soup because it melted.’ As a result, firms are often forced to show impairment losses, even if they haven’t actually sold their assets. Just think of the accountants scratching their heads!

Celebratory Shout-Outs

Saylor wasn’t shy about sharing his joy. After the FASB vote passed 7-0, he congratulated the Bitcoin community, calling it a critical step towards making corporate accounting for Bitcoin less of a two-step dance on a hot grill and more like a smooth waltz. So, while Saylor might be reeling from market dips, he’s still popping the champagne for this voting victory.

A Hope for Future Clarity

Next steps? Nobody knows when this review will happen, or what it might yield. However, if the FASB chooses to redefine digital assets to be closer to traditional financial assets, companies will finally get to report their Bitcoin like they do their cash in hand—accurately reflecting the actual value instead of a fire sale price. For example, companies like Tesla and MicroStrategy have had to endure accounting gymnastics over impairment losses despite their assets sitting pretty.

Real-World Impact

There’s no animosity like an accounting report’s animosity. Townsquare Media recently reported a $400,000 impairment loss on its Bitcoin holdings even though they could’ve sold them for a substantial profit. Situations like these make many scratch their heads or shout at the accountant—none of which is particularly productive. But it grows ever clearer that better accounting rules could mean a less somber outlook.

MicroStrategy’s Roller Coaster

MicroStrategy’s predicament highlights the bizarre corner businesses find themselves in. In its last quarterly report, MicroStrategy noted that its average Bitcoin purchase price was about $30,700—but BRACE YOURSELVES—Bitcoin’s price has slipped to around $29,741. If they were reporting today, they’d show a loss. This roller coaster has left Saylor’s riches looking more like a funhouse mirror, with his net worth dropping from $1.6 billion to almost $1 billion in mere months.

The HODL Mentality

Yet there Saylor stands, determined to keep buying and holding. It’s like he’s penned a love letter to Bitcoin that he refuses to take back, despite the market’s ups and downs. In Saylor’s mind, long-term vision is the order of the day—even if the numbers are a little ‘distorted’ right now.