FASB proposed conditions under which stablecoins could be treated as cash equivalents

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. The draft, released on August 18, 2026, addresses a question that corporate accountants and auditors have wrestled with for years.

FASB said the current uncertainty has produced what it called diversity in practice, with companies treating similar tokens in different ways. Current accounting guidance defines cash equivalents as short-term, highly liquid investments readily convertible to known amounts of cash and subject to minimal value-change risk, but it did not explicitly say whether a fiat-pegged token meets that test.

Three Conditions to Qualify

FASB's proposal lays out a three-part test. A stablecoin has to carry an on-demand contractual redemption right. It has to give holders a direct line to the issuer, not some secondary buyer, to swap the token for a known cash amount. And it has to be backed by one-to-one segregated reserves held in short-term, highly liquid assets. Hit all three, and a company might be able to classify the stablecoin as a cash equivalent under U.S. GAAP. Miss even one, and it does not qualify.

Secondary market trading alone would not be sufficient. Reserves backed by crypto or gold would also fail the test due to valuation risk, as those assets do not meet the requirement for a known cash amount on demand. Qualifying tokens would be accounted for alongside U.S. Treasuries, commercial paper, and money market funds as cash-like assets on corporate balance sheets.

What the Proposal Does and Does Not Change

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. FASB said the step would give investors clearer information and better align U.S. rules with international accounting standards.

The proposal from @FAFNorwalk also introduces broader disclosure requirements. The draft adds a disclosure rule that reaches beyond crypto. Any company reporting cash equivalents would have to list their significant components and related amounts each year. The examples given include Treasury bills, commercial paper, stablecoins, and money market funds.

FASB is accepting public comments on the proposed update until November 19. The organization will set an effective date after reviewing stakeholder feedback. The push for reform stems from input gathered during the FASB Board's 2025 agenda consultation process.

Sources:
CoinTelegraph: FASB Proposes Conditions for Stablecoins as Cash Equivalents
CoinDesk: U.S. Accounting Standards Group Proposes Way to See Stablecoins as Cash Equivalent
Accounting Today: FASB Proposes Stablecoin Disclosures