The Financial Accounting Standards Board has received hundreds of letters inspired by MicroStrategy urging a review of US accounting standards to accommodate companies that own Bitcoin, Bloomberg mentioned.
MicroStrategy recently wrote to the Financial Accounting Standards Board (FASB), “This disconnect between an entity’s financial statements and the economic reality of its financial position and results of operations leads to confusion and fails to provide information to investors, analysts, and the general public. They need to make an informed assessment of the entity’s current and future prospects.”
Currently, companies that are not investment firms report Bitcoin as an intangible asset. This means that Bitcoin is recorded on the balance sheets at its historical cost and then diluted if the value falls. Despite this, the value cannot be adjusted upwards if the bitcoin price goes up.
Notably, the FASB does not change the rules based on the number of messages it receives, but the volume indicates a clear consensus among companies that hold bitcoin in reserve and other interested parties: current regulations fail to provide investors with clear information about the company’s financial prospects, especially in relation to bitcoin. .
Among those who wrote to the FASB urging them to take action were the Big Four accounting firms, the Committee of the American Institute of Certified Public Accountants, some investor groups, and individual firms. The requests were in response to the Financial Accounting Standards Board’s call to contribute to its long-term agenda. Comments were due to be submitted on September 22nd.
The Alliance of Concerned Investors wrote: “We recommend that the Financial Accounting Standards Board begin the digital asset accounting project immediately; waiting until it becomes mainstream in financial reporting may put the Financial Accounting Standards Board in a position too late, and may never catch up.”
The FASB rejected previous calls for a revision of bitcoin’s accounting standards, claiming that most companies do not have large holdings, and that if they accept the currency as payment, they immediately convert it into cash, Bloomberg mentioned. However, some major companies have doubled their investments in Bitcoin, including MicroStrategy and Square, and are not selling.
In early September, MicroStrategy CEO Michael Saylor announced that the company had purchased an additional 5,050 bitcoins for $242.9 million in cash during the third quarter period.
Since August 2020, MicroStrategy has purchased and held approximately 114,042 Bitcoins, acquired at a total purchase price of $3.16 billion and at an average price of $27,713 per Bitcoin, including fees and expenses. The company owns more bitcoin than any other public company in the world.
