The Financial Accounting Standards Board has proposed guidance outlining when companies may classify stablecoins as cash equivalents under US generally accepted accounting principles — a change that could clean up corporate balance sheets holding dollar-pegged tokens.

Tuesday's proposed Accounting Standards Update adds illustrative examples to the existing cash-equivalent definition rather than rewriting it, addressing the inconsistent treatment digital assets have received from auditors and issuers to date.

The Three-Part Test

Under the proposal, a qualifying stablecoin would need to satisfy three conditions:

  • An on-demand contractual redemption right
  • A direct redemption right with its issuer for a known cash amount
  • At least one-to-one segregated reserves held in short-term, highly liquid assets

The examples draw hard lines. Active secondary-market liquidity alone would not qualify a token if the holder lacks a direct issuer redemption right — meaning deep exchange trading is not a substitute for the ability to redeem at par with the issuer. And reserves comprising crypto assets or gold would disqualify a token entirely, due to valuation risk.

The practical effect: mainstream, fully-reserved dollar stablecoins with direct redemption programs would qualify, while yield-bearing or crypto-collateralized tokens would not.

Why Classification Matters

For corporate treasurers, the distinction is more than cosmetic. Assets classified as cash equivalents flow into the top-line cash position on balance sheets and avoid the fair-value volatility treatment applied to other digital assets under ASU 2023-08. A stablecoin that qualifies becomes usable as working treasury cash rather than an intangible investment.

Companies would retain the choice of whether to present qualifying assets as cash equivalents, and would still need to consider relevant laws and regulations — including state money-transmission and custody rules — in their analysis.

Comment Window Open

FASB is accepting public comments until November 19. An effective date will be set after stakeholder feedback is reviewed.

The proposal arrives as stablecoin regulation advances on other fronts — the GENIUS Act framework is in rulemaking at Treasury, and issuers including Tether have moved toward full reserve audits. Accounting recognition, once an afterthought in crypto policy, is now converging with the regulatory push to make payment stablecoins boring, auditable, and bank-adjacent.