- Agency recommendations are based on a fair price model
- It reflects the change in the value of assets “in fact”, without taking into account deferred liabilities
- MicroStrategy supported the transition to a new model, although this will affect the company’s prestige in the eyes of investors
In early February, the Financial Reporting Standards Board (FASB) published new accounting rules for cryptocurrencies, in which they equated them with traditional assets. On May 22, MicroStrategy released an official statement supporting this decision.
The new rules are based on the principle of a fair price. It involves accounting for digital assets “after the fact”, reflecting the change in the amount at the time of the transaction.
This will simplify the analysis of counterparties and their reserves. That is, now the reports will not include long-term liabilities and deferred payments, which could distort the impression of the balance sheet. We have analyzed this document in detail here.
On Monday, May 22, MicroStrategy released an official response regarding the FASB initiative:
“We appreciate the strict approach of the Council. Reporting cryptocurrency holdings under a fair price model, as proposed by FASB, will allow us to provide clients with a more relevant view of the state of the company and the economic value of assets.” – says in circulation.
MicroStrategy is one of the largest BTC holders. The company’s accounts hold 140,000 BTC with a market value of about $4 billion. But if you follow the FASB recommendations, the real value of this portfolio will be about $2 billion.
Note that MicroStrategy has previously advocated changing the accounting rules. In 2022, the company used non-GAAP measures to adjust for an asset impairment loss, which led to a complaint from the SEC.