Chamber Of Digital Commerce Implores FASB To Examine GAAP Standards For Cryptocurrency
The Financial Accounting Standards Board (FASB) will “perform pre-agenda research” on accounting standards for digital currency, and plans to discuss the topic at a public board meeting, on a date to be announced. Based on the presented research, the Board will decide whether to add digital currency accounting to its technical agenda and create an official project. The open meeting will be available on the FASB’s YouTube channel.
The FASB is the primary organization that establishes and improves generally accepted accounting principles (GAAP) in the United States. The private, non-profit organization’s input on digital currency accounting standards could help shape cryptocurrency’s nebulous regulatory environment.
In early June, the Chamber of Digital Commerce petitioned the FASB, appealing for “a project to address the accounting for digital currencies.” Perianne Boring, president of the Chamber of Digital Commerce, authored the letter.
“There is currently no authoritative literature under accounting principles generally accepted in the United States (U.S. GAAP), which specifically addresses the accounting for digital assets, including digital currencies. Although use and acceptance of digital currencies as a method of payment are not yet widespread, the increasing volume of transactions using digital currencies indicates the current need to develop accounting guidance addressing the recognition, measurement, presentation, and disclosure of digital currencies and related transactions.”
Boring noted four potential methods for cryptocurrency accounting: Accounting Standards Codification (ASC) 305 – Cash and Cash Equivalents, ASC 825 – Financial Instruments, ASC 350 – Intangibles – Goodwill and Other, and ASC 330 – Inventory. For a myriad of reasons, she explained that digital currency does not fit neatly into any one of these existing classifications. Instead, Boring suggested the creation of a new-subtopic altogether.
“Digital currencies are unique and unlike any other asset currently addressed in U.S. GAAP. Developing a new sub-topic would allow the standard setter to provide guidance that best represents the economic characteristics of digital currencies.”
Authoritative accounting guidance should promote greater investor confidence as well as cryptocurrency research & development. At present, the FASB is also assessing whether to overhaul accounting standards for intangible assets. It’s possible that cryptocurrency could receive some attention under this consideration.
For now, the Chamber of Digital Commerce has highlighted a “mission critical issue” while continuing to raise awareness about blockchain technology.