The FASB announced a proposal to classify stable currencies such as USDC as cash equivalents

The U.S. Financial Accounting Standards Board proposes new rules: stablecoins may be regarded as cash equivalents

The U.S. Financial Accounting Standards Board (FASB) recently released a new proposal to allow some stablecoins (such as USDC) to be classified as cash equivalents on the company's balance sheet. Circle co-founder Jeremy Allaire described the move as a "major strategic unlocking" in the stablecoin space.

Potential impact on stablecoins and corporate accounting

The FASB proposal was released on August 18 to update topic 230 (relevant sections of the statement of cash flows). Instead of creating a new definition of cash equivalents, the FASB focuses on clarifying existing frameworks and requiring companies to strengthen annual disclosures to clarify the main components of cash equivalents, including any digital assets.

Allaire, whose company is the issuer of USDC, rated the proposal a "9 out of 10" and correlated it with recent regulatory developments, especially the upcoming GENIUS bill. He noted that the combination of favorable accounting standards and supporting legislation would open the door to wider use of the USDC in the financial system.

Allaire highlighted the shift in the way stablecoins are recorded on corporate balance sheets, arguing that classifying tokens as cash equivalents rather than intangible assets will greatly enhance their attractiveness to finance departments and lenders who assess repayment capabilities. If stablecoins are treated as cash equivalents, companies can avoid balance-sheet penalties typically associated with intangible assets-a factor that could significantly affect their adoption by corporate financial managers.

The FASB has opened a consultation period for proposals, with a deadline of November 19, after which final standards and effective date will be determined. Currently, no formal changes have taken effect.

Qualification criteria for stablecoins

The FASB lists several requirements for stablecoins to be recognized as cash equivalents: first, the holder must have the contractual right to redeem the tokens on demand; second, the redemption must be made directly with the issuer and converted into a fixed amount of cash; third, the issuer must hold short-term highly liquid assets equivalent to at least one dollar per token in circulation, and implement segregated reserves.

The committee emphasized that liquidity obtained solely through secondary market transactions does not meet these standards, as prices may deviate from their promised values during periods of market stress. The FASB also excludes stablecoins backed by volatile assets, such as other cryptocurrencies or gold, making them ineligible for cash equivalents. This practice excludes certain algorithmic and overcollateralized tokens, although they are also known as stablecoins.

Although these standards are clear, meeting these standards is voluntary rather than mandatory for qualified companies. Each issuer and company must carefully evaluate whether its tokens meet all requirements before making accounting changes.

Early adopters and questionable views

Coinbase has adjusted its accounting practices. As of December 31, 2025, the company reported that USDC, EURC and PYUSD are all fully backed by segregated cash equivalent reserves and can be redeemed on a 1:1 ratio. Coinbase said that after retrospective adjustments, there have been no changes in previously published financial indicators.

However, not everyone supports the FASB draft. Jack Casonge, an accounting professor at Hofstra University, welcomed the limited scope but remained skeptical about the prospects of stablecoins being classified as cash. He believes the proposal does not "go too far" but still believes the new classification is too loose.

The FASB said that only stablecoins that can be redeemed directly from the issuer with clear cash reserves can qualify, a move aimed at protecting financial stability and limiting risk.

As the November 19 deadline for public comment approaches, industry participants, auditors and corporate financial executives are closely monitoring developments. Subsequent decisions may determine the scale and speed of integration of stablecoins into mainstream finance.