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- A new accounting rule could see the likes of Google, Amazon, and Apple reporting on Bitcoin and other altcoins in their balance sheet.
- This development is said to provide enough reasons for more institutional investors to invest in Bitcoin.
In a new accounting rule set to be published by the end of the year, companies have been mandated to declare their crypto holdings at fair value. This means that tech giants like Apple, Amazon, and Google will report on Bitcoin (BTC) and other altcoins on their balance sheets as early as next year. This is a huge improvement from the existing practice which has been criticized for its lack of flexibility. While the new standard could be effective after December 15, 2024, companies are allowed to go for early adoption.
According to Jeff Rundlet, head of accounting strategy at Cryptio, this is a huge decision towards mainstream adoption.
It’s a great step forward for the entire crypto market. I think it’s a great step toward mainstream adoption. I can see finalizing this proposal to help large corporations that are maybe scared to hold crypto on their balance sheet because they’re scared of the technical complexities.
In a latest X (Twitter) post, a renowned crypto influencer Swan Bitcoin, has explained the impact of this decision on businesses that have possession of cryptos and those that are considering investing in them. Reporting at fair value indicates that companies would be able to show the most current value of their crypto holdings.
In the previous practice, Bitcoin was treated as an intangible asset like trademarks or copyrights since companies depended on the practice guide of the American Institute of CPAs. In this case, adjustment after the asset recovery from a dip was not possible. Interestingly, the crypto market is highly volatile, and was necessary to factor this into the entire process.
More Comments on the Bitcoin Inclusion in Balance Sheets
Christine Botosan, a member of the Financial Accounting Standards Board (FASB) spoke about this new rule.
It’s not very often that we can both take cost out of the system and improve the decision usefulness of information, and it makes it a really easy vote to do both of those.
The requirement demands that companies make a distinct entry for crypto assets in their balance sheet. In addition, they would be required to ensure that the annual disclosure of changes in their crypto assets opening and closing balances are done accordingly. Interestingly, it has some exemptions including the immediate conversion of Bitcoin to cash.
Commenting on this, MicroStrategy’s CEO, Michael Saylor stated:
Fair value accounting is coming to Bitcoin. This upgrade to FASB accounting rules eliminates a major impediment to corporate adoption of BTC as a treasury asset.
The possibility of finding crypto assets in the balance sheet of Apple is very high as Apple CEO Tim Cook gave an affirmative answer to a 2021 question about whether he owns Bitcoin or Ethereum. With this recognition, more heavyweight companies would take the asset class more seriously and drive its adoption to a different height.
As of press time, Bitcoin was trading at $25,738.58 and has a bearish market sentiment. In the last seven days, the asset has fallen by 5 percent and also recorded a 12 percent fall in the last 30 days.
