US accounting standard-setters have unanimously voted to introduce new accounting rules for businesses with significant holdings in cryptocurrencies such as Bitcoin and Ethereum. This decision, expected to be published by year-end, could pave the way for tech giants like Apple, Amazon, and Google to include Bitcoin and altcoins on their balance sheets as early as 2024.

Under these new rules, companies will be mandated to report their cryptocurrency holdings at “fair value.” This shift in measurement aims to present the most recent value of an asset, even accounting for rebounds in value after potential price drops. This departure from the current practice, often criticized for its lack of flexibility, has been welcomed by industry experts.

Christine Botosan, a member of the Financial Accounting Standards Board (FASB), expressed her support for the decision, highlighting the benefits it brings. She stated, “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 new standards will become effective from 2025, but companies can choose to adopt them early.

Jeff Rundlet, head of accounting strategy at Cryptio, praised the decision as a significant step forward for the entire crypto market. He believes that this move will help large corporations overcome technical complexities and embrace cryptocurrencies on their balance sheets.

The recent announcement by the FASB has set in motion a monumental shift in the corporate adoption of Bitcoin and other cryptocurrencies. Swan Bitcoin, a prominent voice in the crypto community, acknowledged the significance of this change. Companies investing or considering investment in Bitcoin and other cryptocurrencies will benefit greatly from these new accounting rules.

This shift to reporting at fair value allows companies to reflect the most current value of their Bitcoin assets, accounting for rebounds after potential price declines. Previously, companies relied on the American Institute of CPAs practice guide, which treated Bitcoin similarly to intangible assets. This approach did not allow adjustments if the market recovered after a dip. The new rules significantly enhance transparency and provide a more relevant view of a company’s financial position with regards to their Bitcoin holdings.

Starting from fiscal years after December 15, 2024, both public and private companies will be obligated to adopt these standards. Remarkably, they can choose to implement the rules as early as 2024, setting the stage for the adoption of Bitcoin as a reserve asset by companies.

The FASB’s rules also require companies to make distinct entries for their crypto assets in their balance sheets and disclose significant Bitcoin holdings and any associated restrictions in their footnotes for every reporting period. Annual disclosures of changes in crypto assets’ opening and closing balances will also be required. However, immediate Bitcoin-to-cash conversions are exempted. It’s important to note that Non-fungible tokens (NFTs), stablecoins, and wrapped tokens are not included in these rules.

The FASB’s decision to introduce these rules reflects the growing interest and investment in cryptocurrencies by major corporations. The board has stated its commitment to closely monitoring the crypto markets, suggesting that more rules could be introduced in the future. Industry insiders view this move as the “right first step” towards mainstream adoption.

Swan Bitcoin’s enthusiasm about this development was shared by MicroStrategy’s CEO, Michael Saylor, who believes that fair value accounting for Bitcoin eliminates a major obstacle to corporate adoption of BTC as a treasury asset.

With these changes in place, it’s not unrealistic to anticipate that tech giants like Apple, Amazon, or Google may soon integrate Bitcoin into their balance sheets, further accelerating mainstream adoption. Notably, Apple CEO Tim Cook revealed his ownership of Bitcoin or Ethereum in 2021.

The crypto market is evolving rapidly, and the implementation of these new accounting rules marks a significant milestone. As the industry continues to mature, we can expect more advancements that bring cryptocurrencies into the mainstream, revolutionizing traditional accounting practices.

At the time of writing, the BTC price stands at $25,823.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.