, digital assets must be recorded as indefinite intangible assets. That means they must be marked down for impairment losses but cannot be marked up for value gains, until the asset is sold.
As of this week, Microstrategy owns a total of 125,000 Bitcoins, In the company’s fourth quarter earnings, $110.5 million in gross profit got wiped out by a $147 million impairment loss from holding BTC. But while it reported a carrying value of $2.85 billion in BTC for the last period, its same bitcoin holdings were worth $5.7 billion at market value.
Industry participants have recognized the problem. Between the summer and early fall, the Financial Accounting Standards Board - the standard setting body for corporate accounting and GAAP guardian, received hundreds of letters from companies — including Microstrategy and Coinbase — asking the organization to consider revising its accounting rules for digital assets.
Sledge suggested that the most "meaningful change" FASB could quickly implement would be to permit digital assets with a readily determinable fair value to be measured by their fair value. At a later point, FASB could also address broader issues around whether fair value should be applied more widely to certain types of assets and business models.
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