The Financial Accounting Standards Board (FASB), which sets accounting standards for private and public U.S. companies, has not developed any accounting standards for digital assets. This has proved to be one of the biggest barriers to the adoption of digital assets.
FASB solicited an “agenda request” in September inviting comments from the public on identifying “pervasive needs” to improve generally accepted accounting principles (GAAP), and inquiring about potential areas for future accounting standards setting.
Perianne Boring is founder and CEO of the Chamber of Digital Commerce.
The Chamber of Digital Commerce has been advocating the FASB since 2015 on the need for accounting standards for digital assets. Previously, the FASB has pushed back due to perceived lack of “pervasiveness” of digital assets, and therefore did not allocate the resources necessary to develop authoritative guidance on accounting for crypto.
The Chamber of Digital Commerce led a significant response to the FASB’s most recent agenda, providing input from the Chamber’s more than 200 members, as well as insights from congressional leadership and other industry stakeholders. Our intention was to both educate the FASB and its advisory staff on the pervasive impacts of digital assets, as well as to make a strong case for FASB to now undertake standards setting for digital assets.
We are seeing more and more investors look to digital assets as a hedge against inflation. A survey from Fidelity Digital Assets found that seven in 10 institutional investors from around the world, including advisers, family offices, pensions, hedge funds and endowments, plan to buy or invest in digital assets within the next five years. Deloitte’s 2021 Global Blockchain Survey found 76% of respondents believe digital assets will either serve as a strong alternative to fiat currencies or outright replace fiat within the next five to 10 years.
Through the comment process, FASB received a significant response of 522 comment letters. Of these 522 responses, 445 (85% of the respondents) commented solely and exclusively on accounting standards for digital assets, providing feedback on the pervasive impact of digital assets and the need to prioritize standards setting. More than 50% of the respondents indicated that standard setting for digital assets should be considered as the highest priority for FASB.
The Board will consider the impact of this feedback in upcoming meetings in setting scope and priorities in standard setting.
“We sometimes accelerate projects, particularly when there’s significant investor interest in an emerging issue,” FASB Chair Richard Jones told the Wall Street Journal.
Accordingly, the Chamber of Digital Commerce will continue to work with FASB to assure this crucial standard setting is on the agenda and prioritized accordingly because 2022 is going to be a pivotal year. It is clear from the FASB survey that there is demand to address accounting standards for digital assets. At the same time, the U.S. and other countries seem poised to develop clear policy frameworks for crypto. It is important that all invested in the growth of the digital asset ecosystem continue to work to increase this momentum to bring certainty to the marketplace for innovators and investors alike.