The Financial Accounting Standards Board (FASB) will not include NFTs and some stablecoins in its crypto accounting review, The Wall Street Journal reported on Aug. 31, citing sources.
According to the report, the FASB rule will cover digital assets that are intangible, fungible, and don’t carry any contractual rights to cash flow or ownership of goods and services — Bitcoin (BTC) and Ethereum (ETH) would fall under this purview.
Explaining NFTs and some stablecoin exclusion
NFTs will be excluded from the rule because they are nonfungible and sometimes carry rights to underlying goods and services, while some stablecoins are tangible assets.
Speaking on the exclusion of these assets, FASB board member Susan Cosper told WSJ:
“[NFTs are] not pervasive or material at this juncture. It’s certainly something that we can focus on later if need be.”
Crypto accounting rules are on the way
Companies and investors holding digital assets have repeatedly clamored for more clarity on accounting for crypto assets in their portfolios. However, the FASB only added crypto to its technical priorities in May.
The new criteria outline marks the first step in the board’s rulemaking process. FASB would still have to present and review a proposal before making the rules.
Meanwhile, excluding NFTs and some stablecoins would remain a challenge for companies holding these assets.
The current accounting rules used by companies holding NFTs and other crypto assets are the non-binding Association of International Certified Professional Accountants (AICPA) guidelines.
The AICPA guidelines consider these assets as indefinite-lived intangible assets like trademarks. Under the guidelines, businesses must review the asset’s value annually.
They get a write-down if the asset’s value drops below its purchase cost and have to record profit only when they sell at a price above their purchase price.
These accounting standards have attracted criticism from companies holding crypto pitching for a fair-value accounting rule due to the volatile nature of the space.
According to the Wall Street Journal, a FASB spokesperson said all preliminary discussions on crypto accounting rules would end this year. The board will then vote to determine if it will issue a proposal.
Credit: Source link
