FASB Proposes Letting Some Stablecoins Be Classified as Cash Equivalents

The Financial Accounting Standards Board has proposed an accounting rule change that would allow certain stablecoins to be classified as cash equivalents.

CoinDesk reported on Aug. 18 that the draft amendment would treat stablecoins as cash equivalents if issuers hold liquid reserve assets greater than the amount of tokens in circulation and allow redemption into US dollars at any time. Issuers would also have to disclose the composition of those reserve assets annually.

FASB said the proposal is meant to clarify, through specific examples, how the current definition of cash equivalents applies to certain digital assets.

Uncertainty has persisted over whether stablecoins can be treated under US generally accepted accounting principles, or GAAP, as assets equivalent or similar to cash. That has raised concerns that different interpretations could result in inconsistent accounting treatment.

FASB is the body that sets the accounting standards that make up US GAAP. If the amendment is finalized, qualifying stablecoins could be included in the category of highly liquid cash-equivalent assets alongside US Treasuries, commercial paper and money-market funds.

FASB has been working since 2023 on accounting standards tailored to digital assets. The document released this time is a draft Accounting Standards Update and has not been finalized.

The board will collect feedback from industry participants and other stakeholders through Nov. 19 before proceeding with follow-up steps to establish a final standard.