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The Financial Accounting Standards Board has proposed guidance that could allow qualifying stablecoins to be classified as cash equivalents under U.S. accounting rules. The August 18 proposal would clarify how the existing GAAP definition applies to certain digital assets rather than create a separate accounting category.
FASB’s examples focus on three attributes: an on-demand contractual right to receive cash, direct redemption with the issuer for a known amount of cash, and segregated reserves held at least one-to-one against outstanding tokens in short-term, highly liquid assets.
1:1 Liquid Reserves and Direct Redemption Set Qualification Tests
For a digital asset designed to maintain a stable value, the issuer’s reserve structure would be central to the cash-equivalent assessment. The proposed example uses segregated reserve assets at least equal to the amount of tokens in circulation and held in short-term, highly liquid instruments.
Holders would also need an on-demand contractual right to redeem directly with the issuer for a known amount of cash. A token trading near $1 on secondary markets would therefore not qualify on market liquidity alone.
FASB separately said companies should consider applicable laws and regulations when establishing policies for which qualifying assets they treat as cash equivalents. The proposal does not change the existing definition of cash equivalents.
Companies Would Disclose Significant Cash-Equivalent Holdings by Asset Class
The proposal would also require companies to disclose significant components and related amounts of cash equivalents annually for each balance-sheet period presented. The requirement would apply to all cash equivalents, not only digital assets.
FASB lists Treasury bills, commercial paper, stablecoins and money-market funds as examples of classes that could require separate disclosure when significant. The change is intended to give investors greater visibility into what companies include within reported cash-equivalent balances.
November 19 Deadline Sets Comment Period for FASB Proposal
The proposal is not yet part of U.S. GAAP. FASB is accepting public comments through November 19 before deciding whether to revise and finalize the Accounting Standards Update.
Coinbase has already adopted an accounting policy that classifies qualifying payment stablecoins as cash equivalents, illustrating the differing practices FASB is seeking to clarify.
If finalized, the guidance would provide companies with clearer examples for deciding when certain stablecoins meet the existing cash-equivalent definition. Stablecoins that do not satisfy the relevant conditions would not qualify under those examples.
