FINANCE

Bitcoin whale corporation MicroStrategy has adopted fair value accounting standards.

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Bitcoin whale corporation MicroStrategy has adopted fair value accounting standards.

Global news account @DeItaone reveals that the major Bitcoin-holding company MicroStrategy has adopted fair value accounting standards.

Update: Bloomberg reporter Nicola White and FOX reporter Eleanor Terrett both confirmed that the FASB (Financial Accounting Standards Board) has voted to change the accounting standards for companies holding cryptocurrencies on their balance sheets.

FASB has approved the implementation of fair value accounting standards by the end of the year, benefiting companies like MicroStrategy that hold cryptocurrencies.

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Can Bitcoin Reflect Market Value?

In the past, Bitcoin was not formally accounted for in corporate financial statements due to the lack of formal accounting treatment. In the case of MicroStrategy, it is only recognized at cost and impairment losses are recognized when market values decline, but not recognized for appreciation.

Other netizens have expressed that complying with fair value accounting standards would allow many companies holding cryptocurrencies to formally include digital assets in their accounting books.

If MicroStrategy and other crypto companies are indeed allowed to account for their Bitcoin holdings using fair value accounting, this could pave the way for increased corporate adoption. If companies are able to explain Bitcoin in a way that may more accurately reflect its market value, they may be more willing to hold Bitcoin on their balance sheets as assets.

Fair value accounting could lead to more frequent adjustments of Bitcoin's value on companies' balance sheets, which could have a significant impact on reported earnings, potentially intensifying Bitcoin price fluctuations.

FASB: Previous Proposal to Account for Crypto Assets at Fair Value

In March of this year, the FASB (Financial Accounting Standards Board) proposed a proposal to account for crypto assets at fair value, recognizing any changes in net income within each reporting period. Comments on this proposal will be solicited until June 6th.

This article is continually updated