The US Financial Accounting Standards Board (FASB) proposed new accounting guidance on August 18, 2026. The rules clarify when companies are allowed to record stablecoins as cash equivalents. The proposal adds examples to Topic 230 on the Statement of Cash Flows, but leaves the long-standing definition of cash equivalents under US GAAP standards intact.
For stablecoins to qualify, the FASB has set three strict criteria. First, the token holder must have an on-demand contractual right to redeem the coin directly from the issuer for a specific amount of cash. Second, the issuer must hold a cash reserve ratio of at least 1:1 in a segregated account. Third, the reserves must consist of highly liquid, short-term assets that are easily convertible into cash.
Why Gold and Crypto Are Disqualified
This third requirement is what disqualifies many coins in the market. The FASB emphasized that reserves containing crypto assets or gold as components are immediately disqualified from cash equivalents. The reason comes down to one thing: price fluctuations of these two assets prevent holders from receiving a guaranteed cash payout amount.
Abundant liquidity on secondary exchanges also carries little weight. The FASB stated that the absence of a direct, on-demand redemption right from the issuer automatically disqualifies a token. Consequently, all algorithmic tokens, over-collateralized products backed by crypto collateral, and coins without a redemption pathway are excluded - even if they go by the name “stablecoin” in daily usage.
Coinbase Overhauls Bookkeeping Ahead of Schedule
Although the proposed rules are still seeking public comment, Coinbase voluntarily switched its accounting method at the end of the year, specifically as of December 31, 2025. The exchange recorded three coins - USDC, EURC, and PYUSD - under their cash equivalents asset category.
The FASB has opened a public comment period until November 19, 2026, and will decide on the effective date after reviewing feedback. The formulation of this accounting standard is being worked on separately from the GENIUS Act - the draft federal legislation for US payment stablecoins scheduled to take effect in January 2027.
Ultimately, all entities reporting cash equivalents will be required to detail the main components along with their values. This disclosure must be met without exception, even for corporate entities holding zero digital assets. Through these uncompromising requirements, authorities aim to prevent companies from disguising tokens with volatile prices as solid cash. Reported by crypto.news.
Read also: What is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
