FASB sets three tests for stablecoins to be cash equivalents

On Aug. 18, 2026 the Financial Accounting Standards Board proposed guidance that adds illustrative examples to Topic 230, Statement of Cash Flows, to clarify when companies may classify stablecoins as cash equivalents under US GAAP. The board opened a public comment period that runs to Nov. 19, 2026.

The proposal sets three conditions for a stablecoin to qualify. A token must carry an on-demand contractual redemption right, provide a direct redemption right with the issuer for a known cash amount, and be backed by segregated reserves held at no less than a one-to-one ratio in short-term, highly liquid assets.

FASB would not change the definition of cash equivalents. Instead, the board used examples to address inconsistent accounting for digital assets and declined to accept secondary-market liquidity by itself as a basis for cash-equivalent treatment.

Under the proposal, a holder must have a direct claim on the issuer to classify a token as a cash equivalent; relying only on the ability to sell a token on an exchange would not meet the direct-claim requirement.

The board included a disclosure requirement that would require companies to report annually the dollar amounts of significant components of their cash equivalents. Material stablecoin holdings would be presented as a separate line item for each year shown.

The guidance would sit alongside Section 3(g) of the GENIUS Act, which prohibits stablecoins issued by non‑permitted payment stablecoin issuers from being treated as cash or cash equivalents under statute.

Tokens with redemption programs and reserves held in cash or short-dated Treasury securities are more likely to meet the proposed tests. Tokens that keep reserves in gold, Bitcoin, secured loans or other non‑cash assets would face greater challenges under the reserve-quality requirement.

The direct-claim requirement will affect retail investors and many smaller institutional holders who typically lack a primary redemption relationship with an issuer; those holders would generally not be able to classify tokens as cash equivalents.

Some issuers have argued in filings that deep secondary-market liquidity should be sufficient, but FASB did not adopt that position in the proposal. The board’s deadline for public comments is Nov. 19, 2026.