Part of my role as the leader of FML’s cryptocurrency practice is to stay up to date on all the happenings of the rapidly evolving and always-changing landscape of crypto.
I was recently quoted in an article on CFO.com about the potential approval of a new accounting standard for crypto assets. The Financial Standards Board (FASB) published a proposed accounting standard update that, if approved, would require companies to reveal more information about their cryptocurrency holdings. But they would also make more when assets rise in value.
Here are excepts from the CFO article where I am quoted:
“The new accounting rules allow for companies to record unrealized gains on highly liquid digital assets in their financial statements when the appreciation occurs as opposed to waiting for a disposition,” said Justin Wilcox, a partner at accounting firm FML and leader of its cryptocurrency practice. “The current approach required financial statements to reflect only the decreases in value via impairment, which was totally impractical for this asset class.”
Wilcox also noted companies will still get the benefit of a realized gain or loss method for tax purposes. “So there is opportunity to show upside to the P&L without having cash tax outflow,” he said.
“Simplicity in accounting translates into fewer barriers to entry for companies looking to dive in as well as a more straightforward and efficient way for CFOs and financial statement auditors to account for the emerging tech,” said Wilcox.
I was also interviewed by Hartford Business Journal about the newly formed Connecticut Blockchain Association and its aim to make the state an industry leader in growth and regulation. Here is the excerpt from the HBJ:
“I realized that there’s a lot of people that made a lot of money quickly and didn’t have the knowledge to calculate the tax burden,” Wilcox said. “So, that was an opportunity for us to build out a cryptocurrency tax practice.”
In fact, that field is so new that the Financial Accounting Standards Board only in March of this year issued a proposal on accounting for cryptocurrencies, in an effort to build the first explicit digital asset standard in U.S. Generally Accepted Accounting Principles. The rule is available for public comment until June, before it will be finalized.
“The complexity of transactions is outpacing the law and will continue to do so,” said Wilcox.