At a Wednesday meeting, the Financial Accounting Standards Board evaluated comments on the proposed ASU of crypto assets and initiate to draft a final version of the new accounting standard, effective for fiscal years starting after December 15, 2024.
Key takeaways from the Handout:
- Fair value accounting rules start from 2025 but companies are encourged to take the option to apply them early.
- Wrapped tokens excluded from final rules
Reaction from the industry leader:
- Michael Saylor, the founder of MicroStrategy, tweeted that this development “eliminates a major impediment to corporate adoption of $BTC as a treasury asset.”
- Bloomberg call the proposed ASU 'Long-Awaited'
Our Interpretation of this Update:
Under current accounting standards, crypto assets are recorded as intangible assets. Even if the price later increases and the fair value of the crypto asset increases, the asset value and impairment loss cannot be reversed in accounting treatment.
WIth fair value measure, the gains and losses will be accurately recorded. Although the new standard will bring volatility to the earnings of companies that invest heavily in crypto assets, the disclosure of crypto assets in the financial reports can more appropriately reflect the impact of these assets and provide a better opportunity for business executives and investors to make better decisions.
At the same time, the update brings challenges to companys that hold crypto assets.
- Scattered data: On-chain and off-chain data are scattered across multiple systems (trading, custodian, banks and financial systems), and using spreadsheets makes it hard to handle a large volume of transactions.
- Accounting complexity: Most finance teams are unfamiliar with crypto businesses, making it challenging to treat accounting accurately. Meanwhile, crypto assets are very diverse and volatile, making valuation and cost calculations complicated.
And how Elven can help you to cope with these challenges:
- Crypto Native: We are not a sub-ledger of on-chain data, but a brand-new financial system built specifically for digital assets. The system is embedded with a proprietary crypto accounting engine, and the customer can handle all the needs of crypto accounting within the system.
- One-stop Solution: We provide advisory services on top of the platform to help customers solve all financial management and technical problems. Elven has a professional R&D team that understands accounting and can quickly respond to customer demand for iteration.
- Fiat Accounts Integration: Integrate fiat accounts for exchanges, OTCs, and other institutions, clients can easily handle and reconcile cross-platform transactions(wallets, vault, exchange, bank and financial accounts) in one system.
We have launched three sets of solutions for different customer segments:
- For projects and accounting firms: Crypto Accounting Solution (Cases: Myshell, Berru)
- For CEXs and OTC platforms: Exchange Solution (Cases: Bika, Legend Trading, StellaPay)
- For Stablecoins, RWAs, and DAOs: Proof of Reserve Solution (Cases: HOPE)
Contact us to know more details!