Reported Cointelegraph, the Financial Accounting Standards Board (FASB) has unanimously approved rules for accounting for the fair value of companies’ cryptocurrency holdings, according to media reports. The rules will go into effect in 2025.
Fair value is the estimated price of an asset that takes into account current market value and other decisive elements.
Previous practice required companies to keep impairment losses from crypto, caused when an asset suddenly loses value, on their balance sheets even after the digital asset regained its value.
The new accounting method will increase volatility in the earnings of companies with large crypto holdings but allow them to record financial recoveries from increasing crypto prices.
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Policy and Regulation
