Share this article
SEC Objects to MicroStrategy’s Accounting Adjustment for Its Bitcoin Holdings
The software firm said in a filing it would revise its future reports to reflect the SEC’s concerns.
Updated May 11, 2023, 7:12 p.m. Published Jan 21, 2022, 9:34 p.m.
Michael Saylor’s MicroStrategy won’t be able to remove swings in the value of its enormous bitcoin holdings from its unofficial accounting measures, according to comment letters released by the U.S. Securities and Exchange Commission.
MicroStrategy used non-GAAP rules, or measures that don’t comply with U.S. generally accepted accounting principles, to show what its income would have been if it didn’t have to impair its bitcoin holdings. Bloomberg was the first to report on the comment letters.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Under standard accounting rules, the value of digital assets such as cryptocurrencies must be recorded at their cost and then only adjusted if their value is impaired, or goes down. But if the price rises, that does not get reflected until an asset is sold.
The SEC told MicroStrategy in a filing on Dec. 3 that “...we object to your adjustment for bitcoin impairment charges in your non-GAAP measures. Please revise to remove this adjustment in future filings.”
In mid-December, MicroStrategy replied to the SEC that it would “revise its disclosures of non-GAAP measures in future filings to remove the adjustment for impairment losses and gains on sale related to bitcoin, as requested by the Commission,” according to a filing.
MicroStrategy held about 124,391 bitcoins on its balance sheet as of late December, which were worth about $4.3 billion at current prices. The company’s CEO, Michael Saylor, is a bitcoin bull, likening the cryptocurrency to “digital gold,” and has said many times the company does not plan to sell its bitcoin holdings.
The company didn’t immediately respond to CoinDesk’s request for additional comment.
MicroStrategy shares were down about 17% in Friday’s trading session, with most of the declines occurring earlier in the day as bitcoin prices continued to slump sharply.
Mark Palmer, an analyst at BTIG, wrote on Friday that he thinks the reporting changes the company will have to make are "inconsequential as far as the value of the company and the stock are concerned." Palmer has a buy rating on MSTR.
Read more: MicroStrategy’s Saylor Lays Out Ways Firm Could Generate Yield From Its Massive Bitcoin Holdings
UPDATE (Jan. 21, 21:44 UTC): Updated to remove 'report' from headline.
UPDATE (Jan. 21, 21:51 UTC): Updated headline.
UPDATE (Jan. 21, 22:48 UTC): Added BTIG analyst take in last paragraph.
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
Michael Saylor's Strategy Hangs on to Spot in Nasdaq 100 Index
The annual Nasdaq 100 rebalance saw six companies dropped and three new additions, with changes taking effect on December 22, but bitcoin treasury company Strategy hung onto its spot.
What to know:
- Strategy (MSTR) will remain in the Nasdaq 100 index despite a major reshuffle, which saw several household names dropped.
- The firm's business model, which involves stockpiling bitcoin, has drawn criticism from analysts and index providers, with MSCI considering excluding crypto treasury companies from its benchmarks.
- The Nasdaq 100 rebalance saw six companies dropped and three new additions, with changes taking effect on December 22, but Strategy's bitcoin-heavy strategy secured its spot.
Top Stories
