Bitcoin and other cryptocurrencies may be on the brink of widespread adoption by U.S.-based companies, thanks to a recent change in accounting rules that allows for more accurate valuation of crypto holdings.
The CEO of Bitcoin-only exchange Swan Bitcoin, Cory Klippsten, highlighted the significance of this rule change for companies like MicroStrategy and Tesla, both of which had previously reported impairments on their crypto holdings. Klippsten notes that these companies can now more accurately reflect the true value of their Bitcoin investments.
The new Financial Accounting Standards Board (FASB) rules, released on December 13 and set to take effect in December 2024, allow companies to represent the estimated market value of their crypto holdings more accurately on their accounting books. This is achieved by permitting them to record when they are holding assets at a gain.
Previously, companies could only report impairment when the value of crypto decreased on their books, and this impairment could not be reversed until the assets were sold, even if the value increased while being held.
According to Klippsten, the impact of this change goes beyond Bitcoin-focused companies. He believes it encourages more mainstream corporate adoption of cryptocurrencies, as companies can now use Bitcoin as a “strategic financial asset.” The ability to report on gains and losses associated with crypto holdings could play a crucial role in driving adoption.
Markus Thielen, research head at Matrixport and author of Crypto Titans, echoes this sentiment, stating that the rule change underscores the tangible corporate demand for incorporating cryptocurrencies into a firm’s accounting practices.
As these regulatory adjustments come into play, the door seems to be opening for a new wave of adoption, potentially expanding the use of cryptocurrencies among a broader range of U.S. companies.
