MicroStrategy Says It Supports FASB's Proposed Accounting Rules For Crypto

MicroStrategy MSTR, the publicly traded software company best known for its bet on Bitcoin BTC/USD, said Monday that it supported a proposal from the Financial Accounting Services Board that would let firms use fair-value accounting for crypto held on their balance sheets.

"We appreciate the rigorous process the FASB is undertaking," the company said in a letter, noting that it is the largest public company holder of bitcoin, with 140,000 BTC worth just under $4 billion at current market prices.

Under existing accounting rules dubbed the "indefinite-lived intangible asset accounting model," the company has to use the original purchase price and then record cumulative impairment charges. That means its bitcoin holdings are only valued at $2 billion on its balance sheet, half its fair market value. 

"Reporting crypto asset holdings under a fair value model, as proposed by the FASB, would enable us to provide investors with a more relevant view of our financial position and the economic value of our bitcoin holdings, which in turn would facilitate the ability of investors to make informed investment and capital allocation decisions," the company said. 

The FASB voted on the proposal last year, and the changes are currently in a public comment period.

Long-sought changes 

MicroStrategy faced pushback from the U.S. Securities and Exchange Commission in 2022 when it used non-GAAP measures to try and adjust bitcoin impairment charges. The company has long pushed for U.S. accounting standards to be updated to better account for crypto assets.

The company encourages interested parties to provide feedback on the accounting rules proposal, which the FASB is accepting through June 6. In its letter, MicroStrategy submitted answers to eighteen separate questions.

"Fair value is a more useful and balanced accounting model for investors than the current model, whereby only decreases in fair value are recognized, and subsequent increases are not," the company wrote. "While the current model offers a distorted picture of an entity's crypto asset holdings that may confuse investors unfamiliar with the accounting standard it reflects, fair value accounting provides investors with the ability to make clear "return on investment" calculations, thereby providing the basis for economic reality-driven investment decisions."

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