Hundreds of messages have been sent to the Financial Accounting Rules Board in response to MicroStrategy’s request that US accounting standards be modified to accommodate businesses that own Bitcoin.
According to a report, the Financial Accounting Standards Board received hundreds of messages inspired by MicroStrategy urging it to revise US accounting standards to accommodate businesses that own Bitcoin.
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 condition and results of operations creates confusion and deprives investors, analysts, and the general public of the information necessary to make an informed assessment of an entity’s current and future prospects.”
At the moment, businesses that are not investment firms list Bitcoin as intangible assets. This means that Bitcoin is initially valued at its historical cost and is then degraded if its value declines. Although the value can never be increased in response to an increase in the price of Bitcoin.
Notably, FASB does not adjust its standards in response to the numbers of letters received, but the volume indicates a clear consensus among enterprises holding Bitcoin in reserve and other interested parties: Current regulations do not adequately notify investors about a company’s financial prospects, particularly as they pertain to Bitcoin.
The top four accounting firms, the American Institute of CPAs panel, several investor groups, and individual businesses were among those that wrote to the FASB urging them to act. The requests stemmed from FASB’s request for advice on its long-term agenda. The deadline for comments was September 22.
According to the Alliance of Concerned Investors, “we suggest that the FASB immediately initiate a project on accounting for digital assets; waiting until they become ubiquitous in financial reporting may cause the FASB to fall so far behind that they may never catch up.”
The FASB previously rejected proposals to amend accounting standards for Bitcoin, stating that the majority of businesses do not keep substantial amounts of the currency and that those who do accept it as payment swiftly convert it to cash, according to the report. However, other large corporations, including MicroStrategy and Square, have increased their Bitcoin stakes and are not selling.
MicroStrategy CEO Michael Saylor said in early September that the company purchased an additional 5,050 Bitcoin for approximately $242.9 million in cash during the third quarter.
MicroStrategy has acquired and held approximately 114,042 Bitcoin since August 2020, at a total purchase price of $3.16 billion and an average price of $27,713 per bitcoin, inclusive of fees and expenditures. The company holds more Bitcoin than any other publicly-traded company on Earth.
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