The Cryptocurrency Thread

[MichaelB]

There are now some Bitcoin miners who are public, and more expected to go public this year. Those companies are raising massive equity investment for mining rigs and to hold Bitcoin.

The accounting rules make it difficult for very major companies, like Apple, Google, etc. to adopt Bitcoin in the way that Microstrategies did. It requires a charismatic, a majority share owning CEO, like a Michael Saylor or Elon Musk, to push the systems, accountants and other shareholders to accept Bitcoin on the balance sheet, because GAAP requires the volatility to be counted as a loss, which is hard to explain to investors when it happens. There are efforts underway to change the GAAP rules about this. Until then, it will probably be confined to miners and the Microstrategies type of a public company that can do it. There might also be some other Bitcoin holding SPACS that come public, which have Bitcoin in their core DNA rather than existing business lines based on dollar denominated balance sheets that have to be converted.

What efforts are underway to change GAAP rules regarding balance sheets and crypto asset valuations?

 

[Markola]

What efforts are underway to change GAAP rules regarding balance sheets and asset valuations?

Googling FASB and cryptocurrency turns up lots of hits, and there’s a WSJ article behind a paywall about executives lobbying for change, but here is one such letter from the California Society of CPAs to FASB explaining how the asset class is growing dramatically but the current accounting rules in the US don’t fit very well.

https://www.fasb.org/cs/BlobServer?..._RIX.pdf&blobcol=urldata&blobtable=MungoBlobs

 

[MichaelB]

Googling FASB and cryptocurrency turns up lots of hits, and there’s a WSJ article behind a paywall about executives lobbying for change, but here is one such letter from the California Society of CPAs to FASB explaining how the asset class is growing dramatically but the current accounting rules in the US don’t fit very well.

Thanks for the response. A G* search brought up a WSJ article dated 7/19/21 titled “ Accountants, Lawmakers Urge Rules on Crypto Accounting”, and I assume that article is the one you refer to.

I would call this “some interested parties would like to see FASB change the accounting treatment of crypto assets”. For interested readers of this thread, FASB is the group that sets accounting standards in the US. They have made it clear they are not considering making any change to how crypto assets are accounted for, so it’s misleading to assert that efforts are underway, because they aren’t.

 

[Markola]

From Morningstar today:

FASB Targets New Long-Term Agenda, Rules on Expense Disclosure in 2022

The Financial Accounting Standards Board plans to propose new rules on how companies disclose expenses and make key changes to its long-term agenda this year, including exploring potential standards on cryptocurrencies and transactions linked to sustainability issues.

https://www.morningstar.com/news/do...lights-top-financial-services-news-of-the-day

 

[MichaelB]

From Morningstar today:

FASB Targets New Long-Term Agenda, Rules on Expense Disclosure in 2022

The Financial Accounting Standards Board plans to propose new rules on how companies disclose expenses and make key changes to its long-term agenda this year, including exploring potential standards on cryptocurrencies and transactions linked to sustainability issues.

https://www.morningstar.com/news/do...lights-top-financial-services-news-of-the-day

Yes, I am aware of the FASB news. They are studying whether to develop standards for the accounting of crypto assets. This does not mean new rules will be developed or announced, it means they’re studying it. If they do decide to make changes to the accounting standards, the world will have plenty of advance notice, as it’s a very open and transparent process.

Edit to add - a comprehensive analysis and setting of clear standards by FASB would be a good thing and hopefully they will do it. They are not known for speedy action, however. Think tortoise, not hare.

In addition, I’m not sure they will want to make the effort while other important institutions take their time, such as banking regulators, SEC, IRS.

 

[jim584672]

Wow, this thread sure did quiet down once BTC went from $65K to $43K. I prefer stores of value that can keep some value.

 

[Gumby]

This thread has been closed to deal with some persistent problems. A new Cryptocurrency Thread has been opened here: https://www.early-retirement.org/forums/f44/the-cryptocurrency-thread-2-a-112448.html#post2714559 Please read the special rules set forth in the opening post of the new thread before you post to it.