According to media sources, including Bloomberg, the US Financial Accounting Standards Board (FASB) is adding crypto asset transfers to its agenda set for this week. 

What is the FASB?

Founded in 1973, the FASB is an independent, private-sector, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles.

The FASB is recognized by the U.S. Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs. The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports.

The Financial Accounting Foundation (FAF) supports and oversees the FASB. Established in 1972, the FAF is the independent, private-sector, not-for- profit organization based in Norwalk, Conn., responsible for the oversight, administration, financing, and appointment of the FASB and the Governmental Accounting Standards Board (GASB).

Amongst other important issues, the FASB  will discuss how companies should disclose their transfer of cryptocurrencies in their financial reports. This decision could have a large impact on corporate financial disclosures and how accountants need to assist in preparing same. Some say these changes are needed and clarify how companies handle digital asset movements for more consistent and transparency with respect to financial statements. Nonetheless, the update reflects the FASB’s thinking when pertaining to these new emerging challenges, and how same impact the accounting profession, going back to 2023, as seen HERE.  

On December 13, 2023, the FASB issued ASU 2023-08, which pertained to disclosure and accounting requirements for some cryptocurrencies. This guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are obligated to provide supplemental disclosures about the holdings of certain cryptocurrencies. ASU 2023-08’s amendments largely became effective universally for the  fiscal years beginning subsequent to December 15, 2024. 

Why Does this Matter?

Cryptocurrency presents many new and emerging issues, including how accountants and other tax professionals should treat the transfer of cryptocurrency for tax purposes. The FASB has demonstrated a willingness to secure feedback and, when the promulgation of the standards seem to conflict, the FASB is not afraid to correct the error. Tax professionals must pay attention to these developments, as the FASB is moving fast and tax professionals need to keep up.