US accounting board FASB proposes conditions for stablecoins as cash equivalents
FASB has proposed accounting guidance to clarify when certain stablecoins can be classified as cash equivalents under U.S. GAAP. The update would not change the existing definition of cash equivalents, but would add examples to address inconsistent treatment of digital assets. To qualify, a token would need an on-demand contractual redemption right, a direct right to redeem with the issuer for a known cash amount, and at least 1:1 reserves held in short-term, highly liquid assets. Active secondary markets alone would not qualify if holders lack direct issuer redemption rights. Tokens backed partly by crypto assets or gold would fail due to valuation risk. Companies could still choose whether to present qualifying assets as cash equivalents, subject to applicable laws. Public comments are due Nov. 19.
