MicroStrategy backs proposal to account for Bitcoin at fair value in financial reporting

MicroStrategy, the analytics software provider, backsthe proposal FASB which envisions fair-value accounting for cryptocurrencies on the balance sheet.

Today @MicroStrategy submitted a letter responding to and supporting FASB’s proposed accounting standards update to allow fair value accounting for corporate #Bitcoin holdings. If you agree, you can voice support via the FASB survey by 6/6/23. https://t.co/ubJzzoOYat

— Michael Saylor⚡️ (@saylor) May 22, 2023

“We value the initiative of the organisation,” the statement said.

The proposal is out for public comment through June 6.

The company has submitted responses to eighteen questions from FASB.

Under the current standard “the indefinite-life intangible asset impairment model,” MicroStrategy would have to use the original purchase price and then adjust it for accumulated impairment losses.

As of Q1 2023, the company reported the cost of acquiring its first cryptocurrency at $2 billion with its fair value at $3.82 billion at the time, according to BitcoinTreasuries.

“A report on the position in digital assets in accordance with the proposed FASB fair-value model would provide investors with a more up-to-date view of our financial position and the economic value of our bitcoins”, the company explained.

MicroStrategy stressed that fair-value accounting for cryptocurrencies is a more useful and balanced model for investors than the current approach, which recognizes only a decrease in value, while subsequent increases are not accounted for.

“Ultimately, a distorted picture of the organisation’s ownership of digital assets is formed, which may confuse investors unfamiliar with the accounting standard”, the statement said.

In April 2023, the company’s position in Bitcoin turned positive after breaching $30,000.

In November 2022, executive chairman Michael Saylor reaffirmed MicroStrategy’s stance on further purchases of digital gold.