United States: a new rule could encourage companies to buy Bitcoin (BTC)

In the United States, the arrival of a new accounting rule concerning the valuation of Bitcoin (BTC) and other cryptocurrencies in the balance sheets of companies could encourage them to take an interest in our ecosystem.

The book valuation of Bitcoin changes in the United States

Last week, the Financial Accounting Standards Board (FASB) announced that new accounting rules would come into effect regarding the valuation of Bitcoin and other cryptocurrencies on corporate balance sheets in the United States.

The FASB is a non-governmental association, to which the Securities and Exchange Commission (SEC) entrusted the competencies to establish the accounting standards in the country.

Until then, the accounting classification of cryptocurrencies allowed American companies that held them to readjust their value on the balance sheet if they saw their price fall below the cost of acquisition. However, the reverse maneuver was only possible in the event of the sale of these cryptocurrencies.

This could then give rise to inaccuracies, particularly exacerbated in the event that companies like MicroStrategy hold large quantities of BTC, with no intention of selling them. This lack of efficiency now seems to be overcome, with the adoption of so-called “fair value” accounting for cryptocurrencies.

A measure in favor of the adoption of cryptocurrencies

With a book valuation closer to reality, this new measure could encourage companies based in the United States to turn more easily to Bitcoin.

In any case, this is what Michael Saylor, the founder of MicroStrategy thinks:

"The Financial Accounting Standards Board on Wednesday said companies should use fair-value accounting for measuring bitcoin and other crypto assets" – @WSJ

This is a major milestone on the road to institutional #bitcoin adoption.https://t.co/b9r8Av9uys

— Michael Saylor⚡️ (@saylor) October 12, 2022

This company, notably famous for its strong appetite for Bitcoin, also has 130,000 when writing these lines.

Last year, Phong Le, the new CEO of MicroStrategy, had just written to the FSAB arguing for valuation at fair value. According to him, this option was the most logical in order to stick to reality:

We expect the disconnect between the book value reported on our balance sheet and the fair market value of our bitcoin holdings to increase significantly over time. 

While the FSAB has heeded these requests, it will be interesting to see the impact of this new standard on institutional cryptocurrency adoption in the future.