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Staying ahead of FASB update on fair value reporting: Cryptio’s Fair Market Value Module

Staying ahead of FASB update on fair value reporting: Cryptio’s Fair Market Value Module

Almost a year since our update on FASB’s crypto fair valuation proposal for crypto reporting, the organisation has reached a new milestone, where parties reached a consensus that the benefit of fair value reporting for crypto outweighs the expected cost. FASB will now proceed to ballot, and guidance is expected to be finalized by the end of year.

TLDR: What does the announcement mean on a high level?

  • No more impairment charges, allowing businesses to hold digital assets at fair value, recognizing gains and losses immediately. Wrapped tokens and NFT excluded and will still be kept under intangibles.
  • This change is highly positive for corporate and institutional adoption, addressing previous challenges of reporting discrepancies between carrying and fair market values.
  • Effective date & early adoption: All entities will apply effective after fiscal years beginning after Dec 15, 2024, including interim periods within those fiscal years for all entities. This will permit the ability for early adoption. If a 1-year extension is applied to private, it is viewed that most will adopt early.
  • Learn more about how Cryptio’s Fair Value Market Module helps early adopters stay ahead of the curve.

Check out Jeff Rundlet, Head of Accounting Strategy, Cryptio – LinkedIn updates to learn more.

Quick summary of the current standard and what exactly is changing

Under the current accounting guidance, crypto assets are categorized as "intangible assets." This approach necessitates companies to present their valuations at historical cost minus impairment. Due to the volatile nature of crypto assets, this method has been problematic, as it forces companies to report these assets at their lowest values with no provision for revaluation in the future.

The impact:

  • Distorts a company's financial performance on its income statement and balance sheet.
  • Reduces the reliability of these financials for external audiences.

The lack of clear accounting guidance for crypto assets has been a major hurdle to their widespread adoption, leading to confusion and inaccuracies. In essence, the current standard means that businesses must record crypto assets at historical cost, making it challenging to reflect their true market values and the economics of these assets accurately.

Cryptio is well-prepared for this transition, offering solutions to track assets at their fair market value.

Introducing Cryptio's Fair Market Value Module for early adopters

Cryptio introduces its Fair Market Value (FMV) Module to empower enterprises, institutions, and banks with advanced fair market reporting capabilities.

Key features of Cryptio’s Fair Market Value Module, include:

1. Unit Lot Level Tracking

Cryptio's module allows for in-depth tracking at the unit lot level, providing a granular view of asset movement. Whether you need to account for the cost, book, or fair value of assets, Cryptio has you covered.

2. Automated Adjustments Setting

With Cryptio’s FMV module, you can schedule automated adjustment as frequent as on a daily basis. This functionality can be immensely important for banks who needs to do daily reevaluation to make sure portfolio value reflects the market.

3. Comprehensive Mapping

With Cryptio, you can generate ledger entries without a recorded transaction and new CoA accounts mappings e.g. mark-to-market, adjustments (unrealized gains), and realized gains. This means you can account for changes in asset values based on fair market value, opening up new possibilities for financial clarity.

4. Transparent Reporting

Generate comprehensive, audit-ready reports with ease. Cryptio's FMV module reports provide lot-level details and asset valuation adjustment information, providing portfolio transparency for both public and private entities.

5. Flexible Asset Pricing

Our module provides companies the flexibility to choose what principal market drives their asset revaluations. A relevant feature to capture the wide variety of reporting needs and jurisdictions in the industry.

Cryptio's Fair Market Value Module is not just about complying with accounting standards; it's about gaining an edge in the ever-competitive crypto landscape.

Streamlining accounting and audit preparation for enterprises in crypto

This FASB ruling is a pivotal step toward clearer accounting guidance and greater crypto industry adoption. The fair market report unlocks transparency, reliability, and informed decision-making in the crypto space. With Cryptio's Fair Market Value Module, you're not just keeping up with the industry; you're setting new standards for financial clarity and accountability. Stay ahead in the crypto game with Cryptio – where financial management meets innovation.

Want to be an early adopter of Cryptio’s Fair Market Value Module? Book a demo today.

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