The FASB organization has different aims and missions that include improvisation in financial accounting, reporting standards, and educating stakeholders about the standard rules. It is part of a big nonprofit group that also includes other organizations such as GASB, etc.
FASB stands for the Financial Accounting Standards Board. It is an independent nonprofit organization that was formed in 1973. It follows GAAP (Generally Accepted Accounting Principles) to establish accounting and financial reporting standards for nonprofit organizations and companies in the United States. Recently, it has been working with the IASB (International Accounting Standards Board) to establish compatible standards worldwide.
The SEC (Securities and Exchange Commission) recognizes it as the accounting standards setter for public companies. The mission of the organization is to improve financial accounting and reporting standards. The information is useful to investors and other users of financial reports. The purpose of the organization is to educate stakeholders on how to understand and effectively implement the standards. It is governed by seven full-time board members, and these are appointed by the FAF’s board of trustees.
There is one more organization, the GASB (Governmental Accounting Standards Board), which is very similar in function to the FASB. It was established in 1984 to set accounting and financial reporting standards for local and state governments across the U.S. Both are part of a larger independent nonprofit group.
FASB approved the commonly accepted accounting practice of mark-to-market in early September 2023 to apply to businesses and corporations that are holding crypto digital assets. FASB’s new rules categorized crypto in a separate digital asset category. In this category, the loss or gain based on the acquisition price would be declared in a mark-to-market fashion. The rules will take effect in 2025 but companies can choose to adopt them earlier. These rules will have massive consequences for Bitcoin and crypto adoption in the corporate world.
The buying and selling of digital assets were completely dependent on the volatility of Bitcoin and other cryptos. But after the rules, most holders on the market will be retail traders and speculators. It is expected that the volatility could be dampened with the advent of institutional buyers. The high price volatility of Bitcoin and other crypto may go away once corporations, sovereign wealth funds, hedge funds, and family offices adopt them because these entities are not prone to sudden selling.
Hence, FASB sets rules for private and public companies and nonprofits in the United States. It has been working with other organizations that are all part of big nonprofit groups. These rules may dampen or decrease the high price volatility of Bitcoin and other cryptocurrencies. The majority of users will be retail holders and speculators because of the high impact on the buying and selling of cryptocurrencies as a result of standard rules given by FASB for public, private, and nonprofit organizations.