FASB proposes guidance to help stablecoins qualify as cash equivalents under US accounting rules

The Financial Accounting Standards Board proposed new accounting guidance Tuesday that could allow certain stablecoins to be treated as cash equivalents under US generally accepted accounting principles.

Under the proposal, stablecoins could qualify as cash equivalents if they are backed by liquid reserves at least equal to the value of tokens in circulation, provide annual disclosure of those reserves, and can be redeemed for US dollars on demand.

FASB said the proposed amendments would clarify how the existing definition of cash equivalents applies to certain digital assets, addressing uncertainty that can lead companies to use different accounting treatments for stablecoins.

The change would place qualifying stablecoins alongside other highly liquid assets commonly treated as cash equivalents, including US Treasuries, commercial paper and money market funds.

FASB, which establishes accounting standards under US GAAP, began developing crypto specific accounting guidance in 2023.

The proposal remains subject to public feedback and has not been finalized. Comments will remain open until November 19.