As the financial landscape evolves, cryptocurrency is rapidly gaining recognition as a legitimate asset class. A recent development highlights this shift: Microsoft shareholders are set to vote on whether the tech giant should invest in biitcoin. Considering that the company currently has some $75.5 billion in cash on its balance sheet, the corporation that Bill Gates built could easily become a mega-whale in the crypto market.
Why bitcoin? Well, take a look at how MicroStrategy, the OG bitcoin bull, has done with their big bet on diversification with crypto (even borrowing money to do so).
Why now? Well, that’s an interesting question…
FASB’s crypto accounting standards
None of my coworkers cared about this story, by the way, no matter how often I told them it was a big deal…
About a year ago, the Financial Accounting Standards Board (FASB) updated their guidelines for corporate crypto ownership. Before the change, crypto holdings simply weren’t treated as assets at all. As the WSJ tells us:
Companies had to review the value of such assets at least once a year and write it down if it drops below the purchase price. If the value were to rise, companies can record a gain only when they sell the asset, not if they continue holding it.
As Bloomberg’s Matt Levine put it, “The U.S. generally accepted accounting for bitcoin is that it can go down, but not up:”
Not anymore:
…a new standard that would require businesses to use fair-value accounting for bitcoin and certain other crypto assets. Companies and accountants have repeatedly rallied for this change, as it would allow them to recognize losses and gains immediately, and treat digital assets as they would financial assets…
Basically, this change removed the major disincentive that limited corporate ownership of crypto.
FASB gets it! Crypto isn’t a copyright or a brand name (“indefinite-lived intangible assets” in CPA-speak) – it’s a financial asset. When its value goes up, well, so should a company’s value.
Crypto’s role in diversification
Love them or hate them, Microsoft is one of the core companies that invented the information age. They’re visionaries.
I think they’re making a bet on the future of money. They’re not alone.
Traditional banks are actively embracing blockchain.
Wall Street’s biggest firms are engaged in a sprint toward crypto.
And governments are actively discussing Strategic Bitcoin Reserves!
As my grandpa used to say, “Where there’s smoke, there may not be fire – not yet – but you’d be smart to investigate further.”
A pivotal moment in finance and investing
The growing trend of adoption I just outlined not only validates crypto as an asset, but also promises to drive more capital into the market and bring new opportunities for investors.
Diversifying with cryptocurrency isn’t just smart, I’d argue – but necessary. In today’s rapidly changing financial landscape, to ignore new developments is to be left behind.
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Don’t let yourself be left behind – embrace the future of finance today and diversify your savings with BitIRA!
