FASB Finalizes New Accounting Standards for Crypto Assets

blockchain.news:

The Financial Accounting Standards Board (FASB) has taken a significant step in addressing the complexities of accounting for crypto assets. On December 13, 2023, FASB issued an Accounting Standards Update (ASU) No. 2023-08, aimed at improving the accounting and disclosure of certain crypto assets. This update is a response to the evolving nature of digital assets and the need for more relevant financial reporting in this area.

Introduction of the New Standard

The new standard is a culmination of feedback from various stakeholders who emphasized the importance of enhancing the accounting and disclosure practices for crypto assets. FASB Chair Richard R. Jones stated that the update aims to provide more relevant information that accurately reflects the underlying economics of crypto assets and an entity’s financial position, thereby reducing the complexities and costs associated with current accounting practices​​.

Key Amendments in the ASU

The core amendment of the ASU revolves around the measurement of certain crypto assets. Entities holding these assets must now measure them at fair value each reporting period, with changes in fair value recognized in net income. This shift from the traditional cost-less-impairment model to a fair value measurement is expected to bring greater transparency and relevance to the accounting of crypto assets. The amendments also mandate disclosures about significant crypto asset holdings, contractual sale restrictions, and changes during the reporting period​​​​.

Criteria for Applicability

The ASU applies to all assets that fulfill specific criteria, including being intangible assets as defined in the FASB Accounting Standards Codification, not providing enforceable rights to