It is necessary for companies to have clear accountability rules related to virtual currencies. This is why the California Society of CPAs is currently requesting clarity in accounting. This would help companies deal with virtual currencies.
- California Society of CPAs pushes for clarity in accounting regarding digital assets
- Companies are requesting clear and friendly crypto regulations
The California Society of CPAs is requesting authorities to provide the space with accounting clarity regarding virtual currencies. The requests come due to the fact that there is a lack of specific guidance within U.S. GAAP, which are the standard accounting protocols that are used in the United States.
CPAs Request Clarity Regarding Crypto Accounting
According to CoinDesk, the 54-member committee’s concern is related to the divergence in the current reporting methods that are utilized by companies that itemize cryptocurrencies on their financial statements. Thus, there are different approaches that reflect the current nature and risks of holding digital currencies.
Indeed, due to the lack of clarity regarding crypto regulations and rules, there are companies that can treat the most popular digital asset as a commodity or even as a working capital. This is according to Andrew Parrish, co-founder of Alternative Tax Policies.
At the same time, the Financial Accountding Standards Board explains that some institutions are currently interpreting digital assets as indefinitel-lived intangible assets under ASC 350. However, there is no consensus about it and companies end up taking different approaches.
Nancy Rix, the Chair of CAICPA’s accounting principles and assurance services committee, said that the usage of virtual currencies will not diminish over time and it will continue to expand in the market. Indeed, there are more companies working with different kinds of digital assets and many others could start doing so in the future as well.
It is important for virtual currencies to operate under clear rules and legal framework. This would allow firms to be more efficient and crypto projects to expand in the market. Digital currencies have been growing over time and companies participating in the space are requesting more friendly regulations.
There are some jurisdictions around the world that were able to create crypto-friendly legal frameworks and help digital currencies to expand.