MicroStrategy has issued a letter to the Financial Accounting Standards Board (the “FASB”) in response to the FASB’s 2021 “Invitation to Comment” on their future standard-setting agenda.

Michael Saylor expressed:  “The existing indefinite-lived intangible accounting model being applied to digital assets like Bitcoin does not provide investors or the public with the information they need to make an informed assessment of an entity’s current and future prospects.

We believe digital assets should be measured at their fair value at the end of each reporting period to the extent that such fair value is “readily determinable”, with unrealized gains and losses reported in an entity’s income statement as “other income (loss)

If you agree and would like to help, FASB would like to hear from you. Please provide your comments to FASB by Sep 22 – this proves prevalence and makes it more likely the matter will be addressed.”

In its response letter, MicroStrategy urges the FASB to take action on the accounting for digital assets, such as bitcoin, and update the accounting model to reflect changes in fair value.

The letter was addressed to Hillary Salo, the technical director of Financial Accounting Standards Board.  The letter is 6 pages long and those who want to get an exhaustive glimpse can check there.

An extract from the letter:  “We view our Bitcoin holdings as long-term holdings and we do not plan to engage in regular trading of bitcoin. As of the date of this letter, we have not sold, hedged or otherwise entered into derivative contracts with respect to our bitcoin holdings, though we may sell bitcoin in future periods as needed to generate cash for treasury management and general corporate purposes. We have also not targeted any specific amount of bitcoin holdings, and we will continue to monitor market conditions in determining whether to conduct debt or equity financings to purchase additional bitcoin.”

Community response:  Is there a way bitcoin can reduce wealth inequality once is globally adopted? I’m sure that the implied night-watchman state will improve things but I wonder if there’s a cohesive mechanism to reduce gini index globally.

Ok, now I’m really confused because why would it be reported as loss?

This is likely the most important initiative for Bitcoin. If FASB endorses fair value accounting for Bitcoin, billions of $ of public company capital will move into Bitcoin.

Not sure it really matters. Investors are smart enough to track fair value. Right? For a profitable company, booking loses for interim bitcoin dips is a feature not a bug. Tax loss with no sale! Seems glorious to me.

Excuse my ignorance but how is it accounted now? Just treat it as a foreign currency. It’s legal tender now.