Stablecoins Could Soon Qualify as Cash Equivalents Under New U.S. Proposal

The Financial Accounting Standards Board (FASB), the nonprofit organization responsible for setting U.S. accounting standards, has proposed that certain stablecoins could qualify as cash-like assets.

The U.S. accounting standard setter released the proposal Tuesday in an effort to resolve uncertainty over whether stablecoins can be treated similarly to cash under generally accepted accounting principles (GAAP).

Under the proposal, stablecoins could be classified as “cash equivalents” if they are backed by liquid reserves equal to or greater than the amount of tokens in circulation, with those reserves disclosed annually. The tokens must also be redeemable for U.S. dollars on demand.

FASB said the proposed changes would use specific examples to explain how the existing definition of cash equivalents could apply to certain digital assets. The clarification comes amid an ongoing debate over stablecoin accounting, which has resulted in different treatment depending on how and where the assets are accounted for.

Because FASB establishes GAAP standards, the proposal could place qualifying stablecoins alongside other highly liquid assets commonly considered cash equivalents, including U.S. Treasury securities, commercial paper and money market funds.

FASB began developing accounting guidance specifically for crypto assets in 2023. Its latest proposal, formally described as an “accounting standards update,” details the potential changes and the reasoning behind them.

The proposal is not yet final. FASB is seeking public feedback and has set Nov. 19 as the deadline for submitting comments.