U.S. accounting-standards group proposes way to see stablecoins as 'cash equivalent'
The Financial Accounting Standards Board (FASB) has proposed new guidelines that would allow certain stablecoins to be classified as 'cash equivalents' under GAAP. To qualify, stablecoins must maintain liquid reserves equal to their circulating supply and offer redemption for dollars at any time.
Why it matters
This proposal provides a standardized regulatory framework for digital assets, potentially increasing institutional adoption by aligning stablecoin accounting with traditional financial instruments like Treasuries.
The U.S. standard-setting organization accounting made an important proposal for stablecoins on Tuesday, answering uncertainties about whether stablecoins could be considered the same as cash under common accounting practices.
Stablecoins that have liquid reserves (whose contents are disclosed each year) at least equal to the circulating tokens, which can be cashed in for dollars at will, can be considered "cash equivalents," the Financial Accounting Standards Board said in the proposal.
"The amendments in this proposed update would clarify, through illustrative examples, how the current definition of cash equivalents applies to certain digital assets," the board said in its proposal, which was issued in answer to an ongoing dispute over how stablecoins are viewed, which it said could create different accounting treatments depending on the source.
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