Proposed Conditions for Stablecoin Cash Equivalent Status

The Financial Accounting Standards Board has proposed new U.S. accounting guidance to clarify when companies may classify certain stablecoins as cash equivalents, aiming to resolve inconsistent financial reporting practices. The proposal, issued on August 18, 2026, outlines three specific conditions a digital asset must meet to qualify for this treatment under generally accepted accounting principles.

Under the proposed update, a stablecoin could be presented as a cash equivalent only if its holder has an on-demand contractual right to redeem it directly with the issuer for a known cash amount. Furthermore, the issuer must hold reserves of at least one-to-one in segregated accounts, consisting of short-term, highly liquid assets readily convertible into known cash amounts. The board emphasized that secondary market liquidity alone would not be sufficient if a holder lacks direct redemption rights. Another example in the proposal rejects cash equivalent status for tokens backed by volatile assets like crypto or gold, as price fluctuations could prevent redemption for a known amount.

The guidance is intended to promote more consistent application after stakeholders reported...