The Financial Accounting Standards Board (FASB), which establishes accounting rules in the United States, has proposed a framework that could allow certain stablecoins to be classified as cash equivalents.
The proposal, released Tuesday, aims to address uncertainty surrounding how stablecoins should be treated under generally accepted accounting principles (GAAP), particularly whether some dollar-pegged tokens can receive accounting treatment similar to cash.
Under the proposed approach, a stablecoin could qualify as a cash equivalent if its issuer maintains liquid reserves equal to or greater than the value of tokens in circulation. The reserves would also need to be disclosed annually, while holders would have to be able to redeem the stablecoins for U.S. dollars on demand.
FASB said the proposed update would provide illustrative examples showing how the existing definition of cash equivalents can apply to certain digital assets. The guidance is intended to reduce inconsistencies in stablecoin accounting, which can vary depending on the circumstances and accounting interpretation.
If adopted, qualifying stablecoins could join other highly liquid assets that receive cash-equivalent treatment, including U.S. Treasury securities, commercial paper and money market funds.
FASB has been developing cryptocurrency-related accounting guidance since 2023. Its latest proposal is contained in an “accounting standards update” that explains the proposed changes and the reasoning behind them.
The measure is still subject to review and has not been finalized. FASB is inviting public comments on the proposal through Nov. 19 before considering whether to move forward with the changes.
