Things are getting more interesting in bticoin and crypto world as time goes by. There have been a couple of positive news for bitcoin in just a couple of weeks. There was a brief market movement that turned out to be nothing. However, in a long run all of the changes we are seeing will accumulate and continue making the fundamentals of bitcoin even stronger. At this point any positive news and wins for bitcoin leading up to the next halving event will make next bull run even stronger, I think. What was revealed in the news today is equally as important as any wins in bitcoins history, and will play a significant role in its growth and success. Financial Accounting Standards Board will be introducing new fair value accounting rules for bitcoin and other cryptocurrencies. Michael Saylor has spoken about the importance of fair value accounting for bitcoin and how it would attract more companies to add bitcoin to their balance sheets.
Everybody knows Michael Saylor is beyond obsessed with bitcoin, and is heavily invested in the asset and technology with his company funds and personal investment. Since Saylor's bitcoin journey began, he has become one of the important personalities in business who is able to convey the value proposition of bitcoin for various audiences. He can describe the benefits in simplest terms, but also explain the corporate or macro-economic benefits of bitcoin strategy. Bitcoin is for everybody. In many bitcoiners' minds there is no doubt that bitcoin will replace gold as store of value and its market cap will surpass the one of gold's. Saylor goes beyond gold's market cap valuation for bitcoin. He believes bitcoin will continue appreciating in value as it attracts more interest from companies and countries.
Three events Saylor mentions will take bitcoin beyond million dollars per coin are: approval of spot ETFs in the US, bank offering bitcoin custody wallets and loans against bitcoin held, and fair value accounting rules for bitcoin. While SEC has been stubborn regarding bitcoin ETF interests, and not so friendly towards crypto lately, big money players like Blackrock entering the field and showing interest in spot ETFs may have changed odds of stop ETFs becoming reality in near future in favor of bitcoin. Moreover, SEC vs Grayscale lawsuit hasn't been going well for SEC either. I tend to agree with the overall market sentiment that bitcoin spot ETF will be happening soon.
Banks have been struggling. It has become evident with banks failing and showing weaknesses earlier this year. Bitcoin doesn't directly compete with banks and its goal is not getting rid of banks. It is simply an alternative for those who are interested to participate in a better money network. Interestingly, bitcoin is also an option for banks to participate in. Perhaps banks would be in better position than any people or entities to take full advantage of the benefits bitcoin offers. One example the SWIFT system. Banks can get an upgrade in a day or less for a better technology if they chose too. However, there are political influences and financial interests that have been preventing banks to become participants in bitcoin network. I think eventually the ones who figure it out early enough, may find that might is way for banks to survive, and maybe even strive. Saylor is making an interesting prediction that banks will be offering custodial services. As bitcoin continues to be recognized by more and more organizations, countries, and governments, that is a possibility.
If bitcoin is replacing gold, and banks traditionally offered services to keep gold safe, they may just choose to do the same with bitcoin. They already have the customers and networks. Creating such services wouldn't be difficult for them. However, why would anybody trust banks with their bitcoins? After all bitcoin offers self-custody of property and ability for anybody to become their own bank. There is no need for people to deposit their bitcoin in banks for safekeeping. Banks can lose the bitcoins and crypto just like anybody else could. While better option to protect property is self-custody and not trusting banks or exchanges, and while this solutions is the best for many, some others may find benefits in letting banks temporarily hold the assets. There may be use cases for individuals and companies to utilize such services. Especially, if banks would offer additional services like loans against digital property.
Saylor's third prediction, fair value accounting for bitcoin is perhaps the most important one. Because MicroStrategy holds hundreds of thousands of bitcoins in their balance sheet, this must be the one that Saylor cares most about. But also Saylor and MSTR didn't really worry about much either, otherwise why would they have accumulated so many bitcoins. They care because this opens up opportunities for other companies to get involved in bitcoin. FABS will be preparing these new rules this year and have them ready by the end of the year. While the new rules are expected to go into effect in 2025, companies will be able to adopt this accounting starting next year. So what does this mean?
It means now the standard for accounting and reporting digital assets like bitcoin or other coins is more fair. Companies will regularly update their balance sheet and can update the valuation of their holding based on market prices. They will be reporting the new numbers quarterly, regardless the prices went up or down. This adds more transparency into company books, and investors can see the real picture. Companies also benefit from this because new rules will represent the true overall health of the company. By the old rules, assets like bitcoin would be considered intangible assets and companies were required to report the losses when prices went down after they have purchased the asset even they haven't sold them yet. However, if prices went up they would be able to do the same thing. They would have to sell the assets to show the real value of their balance sheet. Fair value accounting rules will allow companies to utilize measurements that capture the most up-to-date value of an asset, including rebounds in value after price dips.
Once again, Saylor shows how knowledgable he is regarding corporate finance and demonstrate the ability to see the future of the bitcoin. I am not sure wether Saylor's all predictions will come true, or will come true in near future, but at least getting one or two is not bad. This is especially great to see as we are approaching the bitcoin halving event. Another win for bitcoin, another win for decentralization.