MicroStrategy, a leading business intelligence and analytics software company, has recently made headlines for its reaction to the Financial Accounting Standards Board’s (FASB) new accounting standards for cryptocurrency. In this article, we will explore what these new standards are, how they affect companies like MicroStrategy, and what MicroStrategy’s reaction means for the future of cryptocurrency accounting.
First, let’s take a closer look at the FASB’s new accounting standards. In August 2021, the FASB issued an update to its accounting standards that provides guidance on how companies should account for cryptocurrency transactions. The update clarifies that cryptocurrency should be treated as an intangible asset, rather than a financial asset or inventory. This means that companies must record their cryptocurrency holdings at fair value on their balance sheets and recognize any changes in value as gains or losses in their income statements.
So, how does this affect companies like MicroStrategy? MicroStrategy made headlines in 2020 when it announced that it had invested over $1 billion in Bitcoin as part of its treasury reserve strategy. At the time, MicroStrategy’s CEO, Michael Saylor, stated that Bitcoin was a “dependable store of value” and a “superior asset to hold compared to cash.” However, under the FASB’s new accounting standards, MicroStrategy must now record its Bitcoin holdings at fair value on its balance sheet and recognize any changes in value as gains or losses in its income statement.
MicroStrategy’s reaction to the FASB’s new accounting standards has been swift and decisive. In a press release issued on September 13, 2021, MicroStrategy announced that it had purchased an additional $242.9 million worth of Bitcoin, bringing its total holdings to over 114,000 BTC. The press release also stated that MicroStrategy believes that Bitcoin is a “dependable store of value” and a “superior asset to hold compared to cash,” and that the company will continue to acquire and hold Bitcoin as part of its treasury reserve strategy.
So, what does MicroStrategy’s reaction mean for the future of cryptocurrency accounting? On the one hand, it suggests that companies that have invested in cryptocurrency are willing to continue holding it despite the new accounting standards. On the other hand, it raises questions about how other companies will react to the new standards and whether they will follow MicroStrategy’s lead in acquiring and holding cryptocurrency.
In conclusion, the FASB’s new accounting standards for cryptocurrency have significant implications for companies like MicroStrategy that have invested in Bitcoin and other cryptocurrencies. MicroStrategy’s reaction to these standards suggests that the company is committed to holding Bitcoin as part of its treasury reserve strategy, despite the accounting challenges it presents. It remains to be seen how other companies will react to the new standards and whether they will follow MicroStrategy’s lead in acquiring and holding cryptocurrency.
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- Source: https://zephyrnet.com/microstrategy-responds-to-fasbs-accounting-standards-for-crypto/