A new and very problematic determination of the SEC, as part of SAB 121, will dramatically inflate the Balance sheet of companies holding and safeguarding the crypto assets belonging to users of their platforms. These companies will be required to recognize a liability in their statement of financial position that reflects their obligation to safeguard the crypto assets held for users of the platform. The liability will be recorded against a corresponding asset based on the fair value of the crypto assets. As a result, Coinbase, the world’s largest public crypto exchange, is expected to increase its statement of financial

The entry of the NFTs, which has significantly simplified investment and trade in intangible assets, has given rise to the need for an accounting standard covering all investment assets. The time has come for the global financial standards boards – the IASB and the FASB – to publish a new accounting standard for all investment assets, including Crypto and NFT assets, which will be measured at fair value through profit or loss, so long as it is possible to reliably measure their fair value.

The accounting standards need to draw a clear and consistent distinction regarding the use of the two main measurement bases: Depreciated cost should be the measurement basis for the non‑passive operating assets and liabilities, while, there should be a preference for use of fair value for investment assets and financial liabilities. At the same time, it would be wise to isolate the impacts that are unrelated to the measurement of the current period’s performance (use of other comprehensive income for operating activities, along with separate presentation of the “revaluation line item” that relates to investing and financing activities).

The time may be ripe to rethink the consolidation model. The main reason is the increase over the years of the legal and regulatory “proper corporate governance” requirements, which poses a challenge to the control of a parent over every single asset of its publicly-held subsidiaries. A model that contracts the definition of control on the basis of combination of criteria, such as, easy and simple transfer of money between the parent and the subsidiary, an operational relationship between them and a lack of an unusual separation in the corporate governance, could improve the relevance of the financial statements.

IFRS 17 - the new revolutionary standard which aims to achieve comparability between insurers - may somewhat adversely impact that comparability by allowing considerable flexibility in estimating the discount rate curve used. The discount rate has significant implications on the financial statements of insurers. We believe that the standard should have created a certain hierarchy between the approaches it proposes, or a more comprehensive guidance of the manner of estimating the illiquidity premium and the required adjustments, as well as of the considerations to be taken into account.