Circle CEO Says Proposed US Accounting Rule Would Be a 'Game Changer' for USDC

Circle welcomed a move by the Financial Accounting Standards Board to clarify accounting standards that could allow some stablecoins to be classified as cash equivalents.

On August 21, Circle Chief Executive Officer Jeremy Allaire wrote on X that the proposed standard would be "a huge strategic breakthrough" for expanding digital dollars such as USDC. Coupled with the GENIUS Act, the FASB rule would help enable broad use of USDC by companies and financial institutions around the world, he wrote.

FASB earlier released a proposal that adds specific examples to help companies more consistently determine whether certain digital assets, including stablecoins, qualify as cash equivalents under existing accounting rules.

Under the proposal, a stablecoin could meet the definition of a cash equivalent if holders can demand direct redemption from the issuer for a fixed amount of cash and the issuer holds reserve assets greater than circulating supply in cash or short-term, highly liquid assets such as US Treasuries with maturities of three months or less.

FASB also said it considered the regulatory framework for payment stablecoins under the GENIUS Act in preparing the proposal. The GENIUS Act requires licensed payment stablecoin issuers to hold reserve assets of at least 100% and limits those assets to cash, demand deposits and short-term US Treasuries.