Analysts from Berenberg Capital state that the new rules for crypto accounting by the United States Financial Accounting Standards Board (FASB) will help companies like MicroStrategy eliminate the negative perception caused by impairment losses. The FASB recently approved new rules that allow companies to report the fair value of their digital asset holdings on their balance sheets. Berenberg’s senior equity research analyst, Mark Palmer, believes that this change will benefit companies like MicroStrategy, as they will no longer have to realize impairment losses and can report their digital asset holdings each quarter. Currently, MicroStrategy has accumulated $2.23 billion in impairment losses since it started accumulating Bitcoin in 2020. The negative news coverage surrounding these losses has given the impression that the company’s value has been negatively impacted, even though this is not the case. Under the new rules, companies can report their crypto holdings at fair value, reflecting the current values of the assets. This will allow for a more accurate representation of their holdings, including any price rebounds. MicroStrategy, which holds 152,800 BTC, is expected to apply these new rules in advance and value its BTC holdings at $8.8 billion by April 2024. MicroStrategy CEO Michael Saylor has previously criticized the FASB’s treatment of crypto, stating that it has hindered adoption by tech companies. The change in accounting treatment is seen as a positive catalyst for Bitcoin’s price and adoption by other firms.
