U.S. Accounting Proposal Opens Door for Stablecoins to Be Treated Like Cash

The Financial Accounting Standards Board (FASB) has proposed an accounting framework that could allow certain stablecoins to be recognized as cash equivalents under U.S. GAAP.

The proposal, published Tuesday, is aimed at resolving uncertainty over whether some stablecoins can receive treatment similar to cash in financial reporting.

Under the proposed guidance, a stablecoin could meet the definition of a cash equivalent if it is backed by liquid reserves worth at least as much as the tokens in circulation. The reserves would need to be disclosed annually, and holders would have to be able to redeem the tokens for U.S. dollars on demand.

FASB said the proposed changes would provide practical examples of how the existing cash-equivalent definition could apply to certain digital assets. The goal is to create more consistent accounting treatment for stablecoins, which currently may be classified differently depending on the circumstances.

If adopted, qualifying stablecoins could be placed in the same broad category as other highly liquid assets, including U.S. Treasury securities, commercial paper and money market funds.

FASB began developing dedicated accounting guidance for crypto assets in 2023. The latest proposal is included in an “accounting standards update” that outlines the proposed changes and explains the board’s reasoning.

The proposal has not yet been finalized. FASB is accepting public comments until Nov. 19, after which it will consider whether additional changes are needed before issuing a final standard.