The Financial Accounting Standards Board (FASB) Wednesday took another step toward setting new accounting standards for certain digital assets by narrowing the scope of the cryptoassets that the project will apply to, based on new criteria which leaves out nonfungible tokens (NFTs).
The freshly outlined scope of the standard-setter’s high profile initiative comes roughly three months after FASB unanimously agreed to prioritize its project to improve the accounting for and disclosure of certain digital assets by upgrading the issue to its technical agenda.
For the purposes of the standards, FASB decided that cryptocurrencies must meet five criteria, according to FASB spokesperson Christine Klimek.
They must comply with the GAAP definition of an intangible asset, they cannot provide the asset holder with enforceable rights to underlying goods, services, or other assets, they must be created or reside on a distributed ledger or blockchain, they must be secured through cryptography and they must be fungible, she wrote in an email.
The move to take up crypto in May marked a shift in FASB’s stance. In October 2020 it decided against doing so after determining the issue had not met the criteria of being “pervasive.”
But, board members have come around to recognizing the need for a better crypto accounting model as cryptocurrencies have been especially volatile this year and as the Securities and Exchange Commission have sought to safeguard investors, consumers and businesses against abuses.
Get the free daily newsletter read by industry experts
The return to more normal operations as the pandemic eases is a good time to take a fresh look at your current expenses and liabilities and whether your working-capital ratio is right for your organization.
Navneet Govil built a data tool to provide the investment fund’s executives and limited partners with insights from portfolio companies’ financial data.
Subscribe to CFO Dive for top news, trends & analysis
Get the free daily newsletter read by industry experts
Want to share a company announcement with your peers?
Get started ➔
The return to more normal operations as the pandemic eases is a good time to take a fresh look at your current expenses and liabilities and whether your working-capital ratio is right for your organization.
Navneet Govil built a data tool to provide the investment fund’s executives and limited partners with insights from portfolio companies’ financial data.
The free newsletter covering the top industry headlines
Related Posts
