FASB Proposes Letting Qualifying Stablecoins Count as Cash Equivalents

The Financial Accounting Standards Board has proposed allowing certain stablecoins to be classified as cash equivalents under US accounting rules, potentially changing how companies present qualifying token holdings on their balance sheets and statements of cash flows.

The August 18 proposal does not create a separate accounting category for stablecoins or rewrite the existing definition of a cash equivalent. Instead, FASB would add examples explaining when a digital asset can satisfy the current test for a short-term, highly liquid investment that is readily convertible into a known amount of cash. The public comment period runs through November 19.

Under the proposed guidance, a qualifying digital asset would need to give its holder an on-demand contractual right to redeem directly with the issuer for a specified amount of cash. The issuer would also need to maintain segregated reserve assets of at least one-to-one relative to tokens in circulation, with those reserves held in short-term, highly liquid assets.

That framework would exclude many tokens marketed as stablecoins. A secondary-market peg alone would not be sufficient if holders lack direct contractual redemption rights or if the reserve structure does not meet the proposed conditions.

FASB began examining the issue after companies and accounting practitioners raised uncertainty over whether payment stablecoins could fit within existing US GAAP. The board chose an example-based approach rather than changing the underlying definition, partly to avoid broader consequences for debt covenants, audits and other accounting rules that already rely on the term “cash equivalents.”

The proposal also goes beyond digital assets. Companies would be required to disclose significant classes of cash equivalents annually, giving investors a clearer breakdown of holdings such as money-market instruments and any stablecoins classified in the same category.

The accounting question is becoming more relevant as regulated stablecoins move further into corporate payment and treasury infrastructure. Visa, for example, recently expanded stablecoin funding and wallet payouts through Visa Direct, while Circle reported USDC circulation of $73.3 billion at the end of June.

FASB will determine the effective date only after reviewing public feedback. Until a final standard is issued, the proposal does not change current GAAP treatment.