The accounting standards body explained what kinds of crypto assets would be covered by a rule that will soon be made about companies and their digital assets.
The Financial Accounting Standards Board (FASB) is leaving out non-fungible tokens (NFT) and some stablecoins from its review of how cryptocurrencies should be accounted for, according to a report in the Wall Street Journal.
On Wednesday, the U.S. board explained its criteria for crypto assets that would be covered by a long-awaited rule that requires companies to account for and disclose their holdings of digital assets.
FASB didn’t say what kinds of crypto assets would be left out of the rule. But it said that the rule would apply to digital assets that are “intangible,” don’t have contractual rights to cash flows or ownership of goods and services, and are “fungible.” This is what the Journal says. NFTs aren’t interchangeable by their very nature, and they may come with rights to underlying assets. Some stablecoins, on the other hand, are real assets.
Susan Cosper, who is on the board of the FASB, told the Journal that not many companies had yet invested in NFTs. “At this point, it’s not widespread or important,” she said, adding, “It’s definitely something we can come back to if we need to.”
FASB didn’t talk about how companies that hold cryptocurrencies like bitcoin (BTC) on their balance sheets should report them. At the moment, if the value of a company’s holdings goes down, even if the company doesn’t sell the holdings, the company must record an unrealized loss. But they don’t have to report gains that haven’t come true yet. Companies with other kinds of assets don’t have to follow the same rules. The crypto industry hopes that FASB will update its suggestions to fix this problem.