Accounting change makes it easier for companies to hold Bitcoin—but will any do so?

One of the fun parts of reporting on finance is that the subject is so broad and full of wonky niches that there is always something new to learn. Recently, this has included the process for "uplisting" a stock, which I wrote about last month, and this month it meant looking under the hood of corporate treasuries. As it turns out, treasury management is about much more than just keeping track of a company's incoming cash and paying the bills—that's the accountants' job—and instead involves strategic decisions about how to optimize the use of cash through short- and longer-term investments. Fortune 500-style companies typically employ entire teams who do nothing but that. Which brings us to Bitcoin.

Right now, there are only a handful of companies that include Bitcoin in their corporate treasuries alongside T-bills, commercial paper, foreign exchange, and whatever else. One reason for this is that right now crypto, from an accounting perspective, is poison on the balance sheet since firms can record losses but not gains. In practice, this means that if a company bought Bitcoin at $20,000 and it dropped to $15,000, it must announce an impairment—a nasty sounding word—that never goes away, even if Bitcoin shoots up to $50,000 the same year. Even if holding Bitcoin actually increases a firm's wealth, the PR and financial headaches that go with impairments mean it's likely not worth it.

All of this is about to change, though, since the body that sets standards for the accounting profession just updated the rules for crypto so that, as of next December, firms can mark Bitcoin gains on their balance sheet. If current crypto prices hold up, this is going to deliver a windfall to Tesla, Square, and the tiny amount of firms that have been unafraid to hold Bitcoin. The question now is whether the new accounting rule will lead other big companies—maybe from the finance or tech industry—to put some of their treasury holdings into crypto.

There are reasons to be skeptical. In an insightful thread, accountant and former hedge fund guy James Lavish noted that, even if the accounting concern is no longer an issue, Bitcoin still remains very volatile, so most CEOs will stay away for fear of telling their shareholders the company's crypto holdings are down 30% (even if they double in value the next year). The only CEOs to buck this trend are founding executives who hold large blocks of shares, which makes them unafraid to make unconventional decisions—as Tesla's Elon Musk and Block's Jack Dorsey did with their Bitcoin bets (which have paid off handsomely, by the way).

This perspective makes it hard to share the rah-rah enthusiasm of Michael Saylor, the CEO of MicroStrategy, whose corporate treasury of 174,500 Bitcoins makes it by far the biggest public company that holds crypto. Saylor—whose social media profile is awash in bling and laser eyes—on Wednesday predicted the new accounting ruling will "facilitate the adoption of $BTC as a treasury reserve asset by corporations worldwide."

That sounds overly optimistic but, at the same time, the accountant Lavash says we are likely to see the emergence of more top executives who like the idea of adding Bitcoin to their treasuries. That doesn't sound far-fetched—and if even another 5% of big companies embrace Bitcoin, that would be a major validation of crypto. We will likely find out a year from now.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

This story was originally featured on Fortune.com