Monday, December 5, 2022
 

FASB Crypto Accounting Review Won’t Include NFTs And Stablecoins

  • FASB’s crypto accounting review excludes NFTs and certain stablecoins.
  • This move is because they (NFTs and stablecoins) don’t conform to some of FASB’s requirements.
  • Businesses possessing crypto will need to disclose any value declines below a threshold.

According to a recent report by The Wall Street Journal, the Financial Accounting Standards Board (FASB) of the United States has decided to remove non-fungible tokens (NFTs) and certain stablecoins from the scope of its assessment of accounting standards for digital assets. FASB did not specify any particular cryptocurrencies that would be excluded from the new regulation, but it did imply that only intangible cryptocurrencies would be recognized.

According to FASB spokeswoman Christine Klimek, the board came to the conclusion that in order for cryptocurrencies to be considered compliant with the standards, they need to satisfy five requirements.

According to what Christine stated in an email, the tokens have to be fungible, conform with the GAAP definition of an intangible asset, be generated on or exist on a distributed ledger or blockchain, be protected by cryptography, and be able to give the asset holder with enforceable rights to underlying goods, services, or other assets.

If this is the case, then the new policy will automatically exclude NFTs due to the fact that they are inherently non-fungible and may be associated with ownership rights. Due to the fact that certain stablecoins represent physical assets, the new accounting approach will exclude some of them as well. Susan Cosper, a member of the FASB board of directors, was quoted in the Journal as saying that this is because not many companies have invested in NFTs yet.

Referring to companies’ investments in NFTs, Cosper further added: “It’s not pervasive or material at this juncture. It’s certainly something that we can focus on later if need be.”

Businesses with crypto assets in the future will be required to do an annual valuation of the asset and report any decline in value below a threshold amount.

  • FASB’s crypto accounting review excludes NFTs and certain stablecoins.
  • This move is because they (NFTs and stablecoins) don’t conform to some of FASB’s requirements.
  • Businesses possessing crypto will need to disclose any value declines below a threshold.

According to a recent report by The Wall Street Journal, the Financial Accounting Standards Board (FASB) of the United States has decided to remove non-fungible tokens (NFTs) and certain stablecoins from the scope of its assessment of accounting standards for digital assets. FASB did not specify any particular cryptocurrencies that would be excluded from the new regulation, but it did imply that only intangible cryptocurrencies would be recognized.

According to FASB spokeswoman Christine Klimek, the board came to the conclusion that in order for cryptocurrencies to be considered compliant with the standards, they need to satisfy five requirements.

According to what Christine stated in an email, the tokens have to be fungible, conform with the GAAP definition of an intangible asset, be generated on or exist on a distributed ledger or blockchain, be protected by cryptography, and be able to give the asset holder with enforceable rights to underlying goods, services, or other assets.

If this is the case, then the new policy will automatically exclude NFTs due to the fact that they are inherently non-fungible and may be associated with ownership rights. Due to the fact that certain stablecoins represent physical assets, the new accounting approach will exclude some of them as well. Susan Cosper, a member of the FASB board of directors, was quoted in the Journal as saying that this is because not many companies have invested in NFTs yet.

Referring to companies’ investments in NFTs, Cosper further added: “It’s not pervasive or material at this juncture. It’s certainly something that we can focus on later if need be.”

Businesses with crypto assets in the future will be required to do an annual valuation of the asset and report any decline in value below a threshold amount.

 

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