[Update 12:50 UTC, Aug. 19: Adds background on FASB, proposed disclosure requirements and the US regulatory framework for stablecoins.]
The Financial Accounting Standards Board (FASB) has proposed guidance outlining when companies may classify certain stablecoins as cash equivalents under generally accepted accounting principles in the United States.
On Tuesday, the FASB said the proposed Accounting Standards Update would add illustrative examples to the current definition, addressing inconsistent treatment of digital assets such as stablecoins. The definition itself would remain unchanged.
The proposal says a qualifying digital asset would need an on-demand contractual redemption right, a direct redemption right with its issuer for a known cash amount and at least one-to-one segregated reserves held in short-term, highly liquid assets.
The clarification could give companies a consistent way to report stablecoins used in payments or treasury operations. However, it would not mean every dollar-pegged token qualifies as a cash equivalent.
Not every stablecoin holder would qualify
One example said active secondary markets would not be enough if the holder lacks a direct issuer redemption right. Another example said reserves comprising crypto assets and gold would disqualify a token due to valuation risks.
Companies would retain the choice of whether to present qualifying assets as cash equivalents and would need to consider relevant laws and regulations.
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The proposal would also require companies to disclose annually the significant components of their cash equivalents and the related amounts, including Treasury bills, commercial paper, stablecoins and money market funds. It would apply to all entities that present cash equivalents, whether or not they hold digital assets.
The accounting proposal follows the GENIUS Act, signed into law in July 2025, which created the first US federal regulatory framework for payment stablecoins. The law requires permitted issuers to maintain one-to-one reserves in assets such as dollars and short-term Treasurys, publish monthly reserve details and establish redemption procedures.
The FASB is an independent, private-sector nonprofit that sets accounting and reporting standards for companies and nonprofit organizations that follow Generally Accepted Accounting Principles (GAAP). Its Accounting Standards Codification is the single official source of authoritative nongovernmental US GAAP.
FASB is accepting public comments on the proposed update until Nov. 19. The organization will set an effective date after reviewing stakeholder feedback.
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