FASB Proposes Stablecoin Guidelines for US Accounting Principles

The Financial Accounting Standards Board (FASB) has proposed guidelines for companies to classify certain stablecoins as cash equivalents under generally accepted accounting principles in the United States. The proposal, which is open for public comment until November 19, would add illustrative examples to the current definition of digital assets, addressing inconsistent treatment of stablecoins.

According to the proposal, a qualifying digital asset would need an on-demand contractual redemption right, a direct redemption right with its issuer for a known cash amount, and at least one-to-one segregated reserves held in short-term, highly liquid assets. Examples provided by FASB include cases where active secondary markets are not enough if the holder lacks a direct issuer redemption right, and reserves comprising crypto assets and gold would disqualify a token due to valuation risks.

Companies would retain the choice of whether to present qualifying assets as cash equivalents, but would need to consider relevant laws and regulations. FASB will set an effective date after reviewing stakeholder feedback.