The United States' first 'encryptioncoin accounting rules' officially come into effect! MicroStrategy and Tesla will benefit.

The first 'Cryptocurrency accounting rules' in the history of the United States officially took effect on December 15, allowing companies to include unrealized gains and losses on Cryptocurrency in their quarterly financial reports. It is expected that companies holding a large amount of Cryptocurrency such as MicroStrategy and TSL (Tesla) will benefit.

The Financial Accounting Standards Board (FASB) formulated the first set of accounting rules for cryptocurrency last year, which will take effect for fiscal years beginning after December 15, 2024.

After the new regulations take effect, cryptocurrency companies and any other companies holding Bitcoin or Ether must record the 'fair value' of their cryptocurrency holdings. The fair value is a method used to represent the latest value of the cryptocurrency, and changes in fair value will be included in net profit.

Before this, the United States did not have specific accounting rules to guide companies on how to record and measure the Cryptocurrency they hold.

In the absence of regulations, companies can only follow the accounting rules for 'Intangible Assets' when registering Cryptocurrency, registering it at the 'purchase price', and must carry out 'permanent impairment' when the value declines. Only when selling Cryptocurrency can the increase in assets be recorded as a profit.

However, enterprises that bet on Bitcoin have long been dissatisfied with this one-way accounting method. Due to the significant volatility of Cryptocurrency, this means that any decline in the Cryptocurrency held on the balance sheet must often be recorded as an 'impairment loss' when the company releases its financial statements, resulting in a shrinkage of the company's profits.

According to the new rules, companies must separate their holdings of encryption assets and register them as 'special items' in the balance sheet. Although the new accounting method may bring fluctuations in related income, it allows companies to record the financial recovery resulting from the rise in cryptocurrency prices.

It is worth noting that the accounting rules for Crypto Assets do not apply to NFTs, stablecoins, and Wrapped Tokens.

The first 'encryption currency accounting rules' in the United States officially take effect! MicroStrategy, TSL will benefit. This article was first published in 'Block Times'.