Cryptocurrencies are maturing from speculation into serious corporate assets. Recently enacted accounting guidelines from the Financial Accounting Standards Board promise to accelerate this transition and spur adoption.
“Crypto as a corporate treasury asset is closer than ever,” affirms Blockchain Capital co-founder Bart Stephens.
Previously, uncertain accounting treatment deterred enterprises from crypto. But the FASB’s new Staff Accounting Bulletin (SAB) provides clear guidance.
Specifically, it permits marking digital assets to fair market value on balance sheets and financial statements. This enables accurate tracking of volatile crypto prices. According to Interaxis CEO Adam Blumberg, the SAB could prompt more businesses to invest in crypto as an inflation hedge. The global cryptocurrency market cap recently surpassed $1 trillion in value.
In addition to inflation protection, enhanced capital efficiency motivates corporations. Per Deloitte, multinational companies often amass cash across various regions and entities. Crypto streamlines transfers between accounts and countries.
“It’s an operational efficiency play,” says Trent Barnes of CryptoTaxAdvisors. With coming blockchain integrations, reconciling and reporting on crypto will become even simpler.
Mainstreaming Crypto Assets:
“Corporate treasurers are very interested in using crypto,” affirms Fidelity Digital Assets President Tom Jessop. Surveys reveal over 50% of finance executives plan to hold digital currencies within 5 years.
This expanding role means financial professionals must understand crypto accounting, taxation, and audit procedures to best serve business clients. Crypto now warrants portfolio allocation considerations as an emerging institutional asset class.
For public companies holding crypto, analysts should factor related accounting treatments into forecasts and valuations.
Navigating New Territory:
This new era brings fresh challenges around security, controls, and regulatory compliance. Prudent risk management and monitoring will be paramount. Training employees is also critical. One survey found that just 5% of accounting professionals are “very knowledgeable” about blockchain and crypto. Education must improve to support adoption.
But the SEC’s guidance maps a clearer path forward. “This is a watershed moment for crypto,” says Blockchain Capital’s Stephens. The stage is set for businesses to strategically embrace digital assets.