FASB would make a stablecoin cash, but only for some who hold it

What happened

The Financial Accounting Standards Board issued a proposed Accounting Standards Update on 18 August 2026, Statement of Cash Flows (Topic 230): Cash Equivalents-Disclosure Enhancement and Evaluation of Certain Digital Assets, File Reference No. 2026-ED400, with comments due on 19 November 2026. It does not change the Master Glossary definition of cash equivalents, which remains short-term, highly liquid investments that are readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Instead it adds three illustrative examples at paragraphs 230-10-55-22 through 55-28 and one new disclosure requirement at 230-10-50-1A. The examples set out the attributes a digital asset designed to hold a stable value against a reference asset would need: an on-demand contractual cash redemption right, a direct redemption right with the issuer for known amounts of cash, and segregated reserve assets held by the issuer on at least a one-to-one basis relative to the units in circulation, in short-term, highly liquid assets. Case A qualifies. Issuer C keeps reserves for Digital Asset B in a segregated account, at least one for one, in cash and Treasury bills with original maturities of three months or less; Entity A holds 100 units, maintains an account with Issuer C and has a contractual right to redeem on demand at $1 per unit with no significant fees or restrictions. Case B is the same token and the same issuer with one fact changed: Entity A keeps no account with Issuer C and has no direct redemption right, and there are active secondary markets where it expects to sell at about $1 per unit. The draft says the units are not readily convertible to known amounts of cash and do not meet the definition. Case C changes the reserves instead, to crypto assets within the scope of Subtopic 350-60 and gold held one for one, and fails on the ground that those reserves may move in value for reasons other than interest rates. The disclosure is separate and wider. Any entity that presents assets as cash equivalents, whether or not any of them are digital, would have to disclose annually the significant components and the related amounts, the draft's own examples being Treasury bills, commercial paper, stablecoins and money market funds. Transition for the examples is modified prospective, and an entity adopting them must show a reconciliation of the opening balance of cash, cash equivalents, restricted cash and restricted cash equivalents before and after adoption. No effective date is set. The draft was approved for publication by the unanimous vote of the Board's seven members: Richard R. Jones, Hillary H. Salo, Frederick L. Cannon, Susan M. Cosper, Marsha L. Hunt, Joyce T. Joseph and Catherine M. Shakespeare. The Board's chair told Accounting Today that disclosure of cash equivalents 'is an area that will be broadly applicable' and that 'Stablecoin is kind of like private credit in the sense that whenever someone says it, you can't have a conversation until they tell you about the terms of it'.

Why it matters

The test is on the holder, not on the coin. Two companies can hold the same units of the same stablecoin, issued against the same reserves, and report them differently: the one with an account and a redemption right at the issuer presents cash, and the one that bought on an exchange presents something else. The basis for conclusions is explicit about why. Some stakeholders pointed out that the definition requires only that an asset be readily convertible to known amounts of cash and 'does not explicitly restrict qualification to assets that provide the holder with a direct contractual right to cash'. The Board considered redemption rights reached through an intermediary and rejected them, on the ground that a chain of contracts that may ultimately lead to the issuer 'introduce additional counterparty credit risk' and makes conversion less direct and less certain. So the accounting now prices the distribution chain, and the practical effect is to reward holding at the issuer over holding at a venue. Two findings sit behind the headline conditions and neither is in the reports. Overcollateralisation does not disqualify a token, but only reserve assets that are short-term and highly liquid count towards the one-to-one assessment, so an issuer's excess buffer held in anything else does nothing for the holder's accounting. And the Board says plainly that the definition of cash equivalents 'is intentionally narrow and, therefore, not all stablecoins would qualify'. It also refused to define the term stablecoin, and that refusal cost it something: it considered requiring an entity to name each significant stablecoin holding presented as cash equivalents, acknowledged that such a rule would need a definition, and dropped it, settling for a components disclosure that lists stablecoins as an example category without saying what one is. The project exists because the President's Working Group on Digital Asset Markets asked for it. Its report of July 2025 recommended that the Board 'should consider whether to treat payment stablecoins as cash equivalents under GAAP'. What arrived does not treat payment stablecoins as anything. It declines to use the statutory category the GENIUS Act created, mentions that Act only as an example of laws an entity should take into account, and puts the question back on each holder's own contract. A permitted payment stablecoin issuer with reserves that satisfy the federal statute confers no accounting status on a customer who bought its token on a secondary market.

What is not settled

Whether the direct redemption test survives comment is the live question, because the Board has recorded the argument against it in its own basis for conclusions and asked respondents to answer seven questions, the first of which is whether the examples are clear and operable at all. The second asks whether the draft should refer to relevant laws and regulations, naming the GENIUS Act, and some stakeholders have already warned that referencing law inside GAAP could be read as requiring legal opinions; the Board says it does not intend that. What the accompanying instruction at 230-10-55-22 means is not settled either: it tells an entity to take account of 'laws and regulations that prohibit treating certain assets as cash equivalents', and the draft names none. On-demand is undefined. The Board says the examples 'would not provide guidance on what constitutes an on-demand redemption' and falls back on stakeholders' understanding that it means redemption within normal processing time and without undue delay. Nor is it settled what a holder must know: the draft observes that an entity would need sufficient information to evaluate the amount and composition of an issuer's reserve assets, which puts a diligence burden on the holder that no disclosure regime currently guarantees will be met. There is no effective date, and the Board will set one after reading comments; early adoption would be permitted. Two of the three things the Working Group asked for remain untouched. Nothing here addresses recognition and derecognition, which is the question of whether a lender of digital assets removes them from its balance sheet and whether the borrower's accounting is symmetrical, or what happens when tokens are wrapped or passed through decentralised lending and exchange protocols. Nothing addresses issuer accounting, which is how a company accounts for a token it creates and sells. And a smaller thing worth watching: some Board members thought the existing requirements already gave investors enough, and said so, inside a vote that was unanimous.