More firms set to add Bitcoin to balance sheets after major rule change

A new accounting rule change in the United States may pave the way for a surge in corporate adoption of Bitcoin (BTC) and other cryptocurrencies. The Financial Accounting Standards Board (FASB) released new rules on December 13, which will come into effect in December 2024, allowing companies to more accurately reflect the value of their crypto holdings on their accounting books.

Previously, companies were only able to report impairment on their crypto holdings if the value decreased, and could not reflect any increase in value until the assets were sold. However, the new rules will enable companies to record gains and losses on their crypto holdings, providing a more accurate representation of their true value.

Cory Klippsten, CEO of Bitcoin-only exchange Swan Bitcoin, highlighted that this change is crucial for a wide range of companies, not just those primarily focused on Bitcoin. This shift in accounting standards is expected to encourage more mainstream corporate adoption of cryptocurrencies.

Markus Thielen, research head at Matrixport and author of “Crypto Titans,” emphasized the significant corporate demand for incorporating crypto into a firm’s accounting. He stated that the new rules underscore the increasing importance of digital assets in financial statements and will provide companies with more confidence when valuing their crypto holdings.

The approval of these new rules by the FASB has been met with excitement and optimism within the crypto community and financial industry. David Marcus, co-creator of Facebook’s Diem project, described the rules as a “big deal” and a significant step forward for corporations holding Bitcoin on their balance sheets.

Overall, the rule change is expected to eliminate the poor optics created by impairment losses under the previous rules, potentially paving the way for a landmark year in 2024 for the integration of crypto into corporate financial strategies. This development marks a significant milestone in the growing acceptance and utilization of digital assets in the financial landscape.

As of September 6, Berenberg Capital’s senior equity research analyst Mark Palmer also noted that these new rules could help crypto-holding companies improve their financial reporting and eliminate the negative impact of impairment losses. This further emphasizes the potential positive impact of the rule change on corporate adoption of cryptocurrencies.

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