The Financial Accounting Standards Board has proposed guidance that would clarify when a company may treat certain stablecoins as cash equivalents under US generally accepted accounting principles.
The exposure draft does not declare stablecoins to be cash, change the existing definition of cash equivalents or require companies to classify qualifying tokens that way. Instead, it provides examples showing that the accounting outcome would depend on the rights held by a particular company and the assets backing the token.
Under the proposed example, a digital asset designed to maintain a stable value would need an on-demand contractual right to cash redemption, a direct redemption right with the issuer for a known cash amount, and segregated reserves maintained at least one-to-one in short-term, highly liquid assets.
FASB issued the proposal on August 18 and is accepting comments through November 19. The board will determine an effective date after reviewing stakeholder feedback, so the draft does not change current accounting requirements.
Tradable at $1 would not be enough
The proposal draws a clear line between market liquidity and an enforceable claim on the issuer. In one example, a holder expects to sell a stablecoin for approximately $1 in active secondary markets but has no contractual right to redeem directly with the issuer. FASB concludes that the units would not be readily convertible to a known amount of cash and therefore would not meet the definition of cash equivalents.
That distinction could produce different accounting results for holders of the same token. An institutional customer with an issuer account and direct redemption rights may satisfy the proposed example, while a customer that can only sell through an exchange or intermediary may not. The token’s market price and trading volume would not substitute for the holder’s contractual position.
The qualifying example is also narrower than a generic claim of full backing. It assumes the issuer keeps cash and US Treasury bills with original maturities of three months or less in a segregated account, at least equal to the units in circulation. The holder can redeem directly on demand for $1 per unit without significant fees or restrictions.
A separate example uses reserves made up of crypto assets and gold. FASB concludes that the stablecoin would fail because those assets can change in value for reasons other than interest rates and present more than an insignificant risk of value changes.
Accounting treatment would remain a company policy choice
Even when an asset meets the definition, the existing accounting framework does not force a company to present every qualifying investment as a cash equivalent. Companies establish an accounting policy for which eligible short-term, highly liquid investments they treat that way. The proposal would add stablecoin-focused examples to support that judgment rather than creating a separate accounting category for tokens.
FASB also says companies should consider relevant laws and regulations when setting the policy. That prevents the illustrative accounting test from overriding restrictions that may apply to a particular entity, asset or jurisdiction.
The board deliberately did not propose a definition of “stablecoin.” Its draft instead describes a digital asset designed to maintain a stable value relative to a reference asset and tests its contractual and reserve attributes. This makes the analysis dependent on substance rather than a product label.
Annual disclosures would cover the wider liquidity pool
The proposal would require companies that present cash equivalents to disclose their significant components and related amounts annually. FASB lists Treasury bills, commercial paper, stablecoins and money market funds as examples. That disclosure would apply to all entities with cash equivalents, whether or not they hold digital assets.
For payment companies and corporate treasury teams, the classification could affect how liquid resources are presented and compared across financial statements. But cash-equivalent treatment would be an accounting conclusion, not proof that a token has no settlement, custody, operational or issuer risk.
The proposed examples make legal access to redemption central. Treasury teams considering stablecoins would therefore need to document not only reserve composition and market price, but also who holds the redemption contract, whether redemption is direct, what fees or restrictions apply, and whether the process operates without undue delay.
Payments providers may also need to separate customer-facing liquidity from their own accounting position. A wallet or exchange can offer a liquid market without giving every user a direct claim against the issuer. Under the proposal, that difference could matter more than the apparent ease of converting the token on a trading venue.
What industry participants should watch
The exposure process leaves several practical questions open, including how auditors will assess redemption terms, what constitutes an on-demand process, and how companies should evaluate restrictions or fees. FASB’s basis for conclusions says stakeholders generally understand on-demand redemption to occur within normal processing time and without undue delay, but the proposed examples do not define the term.
The final wording may change after comments. For now, the proposal signals that stablecoin accounting would be holder-specific and rights-based: a stable price alone would not make a token a cash equivalent, and an issuer’s reserve claim would need to be matched by the holder’s direct contractual access to cash.