FASB narrows scope of digital asset challenge to deal with cryptocurrencies

The Monetary Accounting Requirements Board, at its Aug. 31 assembly, determined to slender the proposed scope of its digital property challenge — formally launched in Might — to focus particularly on cryptocurrencies.

The board agreed to 5 particular standards for what the yet-to-be-determined steering covers. To be throughout the proposed scope, the asset should:

• Meet the GAAP definition of an intangible asset (which excludes monetary property);
• Not present the asset holder with enforceable rights to, or claims on, underlying items, companies or different property (corresponding to with a contract);
• Have been created, or resides on, a distributed ledger or “blockchain;”
• Be secured by way of cryptography; and,
• Be fungible.

FASB follow fellow Sally Bishop stated through the assembly that the workers really useful these standards for a number of causes. The intangible asset requirement, she stated, would work to exclude issues for which there are already steering, corresponding to securities and fiat forex, which might serve to chop down on confusion and complexity. It additionally means the board will be capable of leverage present steering, particularly Matter 350, in its crafting of the digital asset steering. She additionally talked about that requiring the asset be on a blockchain excludes different potential property like software program, media or information, which workers felt would muddle the problem. Lastly, by requiring that the asset be fungible, the board doesn’t want to contemplate nonfungible tokens, which remains to be a really new market and doesn’t but demand consideration. 
Board member Marsha Hunt, in supporting the proposed scope, stated that it’ll assist FASB zero in on what’s truly essential in relation to measurement of those property.

“Whereas some may really feel it limits the scope or what we speak about, I believe it helps us outline what might be an operable stage as we transfer on and consider the opposite essential points of what the usual in complete would come with,” she stated.

Many on the board stated that, for the reason that scope has been narrowed to focus particularly on cryptocurrencies versus all digital property — which is a particularly broad class — the challenge and eventual steering must also be renamed. Board member Christine Botosan, as only one instance, stated the outdated identify was fantastic earlier than that they had a correct scoping, however now it must be extra exact so individuals know what it’s they’re speaking about as they focus on cryptocurrencies.

“I perceive why we referred to as this ‘digital property’ up up to now as a result of we did not have a scope. We now have a scope … and our intent is to slender the scope to crypto property, a extra frequent time period that can be utilized to use to the sorts of factor we’re hoping to seize. I believe at this level within the course of, we are able to agree that, now, we should be extra cautious in regards to the phrases we use. I might rename this challenge ‘Accounting for Disclosure of Crypto Property,'” she stated. 

With a proposed scope now accredited, the board shall now work on the second a part of the challenge, measurement. As soon as that’s full, the board will launch a full publicity draft for public remark.