The Financial Accounting Standards Board (FASB) has issued a significant Accounting Standards Update (ASU), aiming to develop accounting and disclosure standards for crypto assets. This move, in response to stakeholder feedback, prioritizes the improvement of crypto asset accounting, aims to provide investors with more relevant information, and seeks to simplify the process while making implementation easier.
The new ASU requires certain crypto assets to be measured at fair value at each reporting period. This is a departure from the old approach, which anticipated the recognition of changes in fair value in net income.
The changes are designed to give investors a clearer idea of a company’s crypto asset holdings. Mandatory disclosures include information about significant amounts, contractual sales restrictions, and changes occurring during the reporting period.
The impact of the ASU covers assets that meet certain criteria: Item Definition, Blockchain-Based Nature, Cryptographic Security, Exchangeability Requirement, and Non-Fungible Origin are among the criteria that must be met.
The ASU sets an effective date for businesses to comply with the new standards. Businesses are required to apply the changes for fiscal years beginning after December 15, 2024, and for the interim periods within those fiscal years.