The Financial Accounting Standards Board issued a proposed Accounting Standards Update on Aug. 18 that would clarify when U.S. companies may present certain stablecoins as cash equivalents under generally accepted accounting principles. The proposal would add examples to Topic 230, Statement of Cash Flows, without changing the existing definition of cash equivalents. Public comments remain open until Nov. 19, after which FASB will decide whether to issue a final standard and set the effective date.
Under the proposed guidance, a digital asset could qualify only if the holder has an on-demand contractual right to redeem it directly with the issuer for a known cash amount. The issuer would also need to hold at least one-to-one reserves in segregated accounts, consisting of short-term, highly liquid assets readily convertible into known cash amounts. FASB emphasized that meeting those conditions would not force classification as cash equivalents; companies would retain the option and must consider applicable laws and regulations.
The proposal explicitly rejects secondary market liquidity as a substitute for direct redemption rights, arguing that market prices can diverge from the promised value during periods of stress. It also would exclude tokens whose reserves include crypto assets and gold because price changes could prevent holders from receiving a known cash amount. FASB said the examples are intended to promote more consistent application after stakeholders reported uncertainty during its 2025 agenda consultation.
Coinbase voluntarily changed its accounting method effective Dec. 31, 2025, saying in an SEC filing that USDC, EURC and PYUSD are redeemable one-to-one and backed by cash equivalents in segregated accounts. The FASB proposal arrives as agencies implement the GENIUS Act, the first federal framework for U.S. payment stablecoins, which generally takes effect in January 2027. The proposal would also require all entities reporting cash equivalents to disclose their major components and amounts, even when no digital assets are included.
