FASB is moving to make the accounting treatment of stablecoins clearer for U.S. companies. According to the board’s project page and a CoinDesk report, the U.S. Financial Accounting Standards Board has proposed an accounting standards update (ASU) that would clarify how the current definition of cash equivalents applies to certain digital assets, opening the door for qualified stablecoins to be recorded as cash equivalents.
To qualify, stablecoins would need to meet three conditions: they must be backed by highly liquid reserves at least equal to the amount in circulation, those reserves must be disclosed annually, and the token must be redeemable for U.S. dollars on demand. FASB said it is acting because, under current U.S. generally accepted accounting principles (US GAAP), there has been uncertainty over whether stablecoins and other digital assets fit the definition of cash equivalents, leaving companies to handle them differently in practice.
The proposal also calls for companies to disclose the main components of their cash and stablecoin holdings to improve transparency.
If stablecoins are classified as cash equivalents, companies would no longer have to account for them as ordinary digital assets. That would reduce valuation and disclosure burdens and bring balance-sheet treatment closer to cash. For businesses that hold or accept stablecoins, the proposal could make accounting less cumbersome and push stablecoins closer to a day-to-day settlement tool.
The proposal is not final. The public comment period runs through Nov. 19. The article first appeared on Chain News ABMedia.