FASB Proposes Stablecoin Classification Framework

The Financial Accounting Standards Board (FASB) has proposed an update to clarify when stablecoins can be classified as 'cash equivalents' under US generally accepted accounting principles (GAAP).

The proposal aims to give companies a clearer framework for evaluating whether specific stablecoins meet the standard required for cash-equivalent treatment.

To qualify, a digital asset would need an on-demand redemption right and reserves held in short-term, highly liquid assets on at least a one-to-one basis. Active secondary market trading alone would not be sufficient if holders cannot redeem directly from the issuer for a known amount of cash.