SEC prohibits MicroStrategy from listing BTC as an asset in reporting – Bits Media

MicroStrategy was forced to remove data on investments in cryptocurrencies from its financial statements at the request of the SEC. The regulator justified this by the volatility of Bitcoin.

MicroStrategy in its financial report for the third quarter, completed 30 september 2021 of the year,   
reported about a net loss in the amount $36.1 million. However, the addition of stock-based compensation expenses and the fall in cryptocurrencies led to, that the company's unofficial profit, not in accordance with accounting provisions (GAAP), grew to 18.6 million.

MicroStrategy reported to the Securities and Exchange Commission (SEC), that she used methods, non-GAAP, to give investors a better understanding of their finances. If the company showed only a decrease in value, she would give an "incomplete valuation" of her bitcoin holdings, what would be "less significant to management or investors" in light of the company's strategy to acquire and hold Bitcoin.

"We believe, "that the inclusion of non-cash losses from Bitcoin impairment may otherwise distract our investors from reviewing the operating results of our business.".

The regulator did not agree with the company and in a letter from 3 December
stated MicroStrategy, that objects to the adjustment and has ordered the company to remove it from future reports. In your answer 16 December MicroStrategy said, that will fulfill the requirements. Against the background of the report correction, the company's shares decreased by almost 18%.

It is worth noting, that MicroStrategy has been actively advocating for changing the current rules for accounting for cryptocurrencies since last year. IN 2021 year, she contacted the Financial Accounting Standards Board (FASB) asking the US accounting law maker to create rules, objectively reflecting the true value of cryptocurrencies. Hundreds of other letter writers followed suit..

The FASB has previously repeatedly rejected calls to create new regulations for cryptocurrencies, but large investments in Bitcoin by MicroStrategy and Tesla changed his attitude to this issue. In December the Council stated, that will begin to investigate this problem.

Just before the New Year, MicroStrategy filed a financial report with the SEC, Which is said, that in the period from 9 by 29 December she bought 1 914 BTC. The company paid approx. $94.2 million in cash at average price $49 229 for bitkoin. As a result, on 29 December MicroStrategy became the holder 124 391 BTC for the amount $3.75 billion, купленных по средней цене $30 159.

Если FASB не создаст актуальный законопроект, разрешающий использовать данные о биткоине в финансового отчете, MicroStrategy так и не сможет включать их в отчет. At the same time, the company back in May 2021 reported, that will issue bonds for $400 million to buy bitcoins with the proceeds. Without an updated financial reporting law, MicroStrategy strategy aimed at accumulating Bitcoin, may be formally unprofitable for the company.