FASB Proposal Paves Way for Broader Adoption of Digital Dollars
Circle CEO Jeremy Allaire has hailed a proposed accounting revision by the Financial Accounting Standards Board (FASB) as a 'huge strategic breakthrough' for expanding digital dollars like USDC.
The FASB proposal adds specific examples to help companies determine whether certain digital assets, including stablecoins, qualify as cash equivalents under existing accounting rules.
Under the proposal, a stablecoin could meet the definition of a cash equivalent if holders can demand direct redemption from the issuer for a fixed amount of cash and the issuer holds reserve assets greater than circulating supply in cash or short-term, highly liquid assets like US Treasuries with maturities of three months or less.
FASB also considered the regulatory framework for payment stablecoins under the GENIUS Act in preparing the proposal. The GENIUS Act requires licensed payment stablecoin issuers to hold reserve assets of at least 100% and limits those assets to cash, demand deposits, and short-term US Treasuries.