Stablecoins, Cash Equivalents, and U.S. GAAP: What FASB's 2026 Proposal Could Change
Published Oct 8, 2026
By Gilbert Gomez, CPA | Gomez CPA | Insights
Digital assets are becoming more difficult to treat as a single accounting category.
Bitcoin, stablecoins, and other blockchain-based assets may use similar technology, but that does not mean they represent the same economic or legal asset. The rights conveyed to the holder can be very different, and those differences can lead to very different accounting conclusions.
Bitcoin provides a useful comparison. Under current U.S. GAAP, qualifying crypto assets such as Bitcoin are measured at fair value each reporting period, with changes in fair value recognized in net income under ASC 350-60.
Certain stablecoins can present a different accounting question. Some provide contractual redemption rights and reserve arrangements that can make them economically closer to traditional cash-management instruments than to Bitcoin.
That distinction is at the center of a new FASB proposal.
On August 18, 2026, the Financial Accounting Standards Board issued a proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Cash Equivalents, Disclosure Enhancement and Evaluation of Certain Digital Assets. The proposal would clarify how the existing definition of a cash equivalent applies to certain digital assets and would add a broader disclosure requirement for entities that present assets as cash equivalents.
Comments are due November 19, 2026.
The proposal is an exposure draft. It is not yet authoritative U.S. GAAP, and its provisions could change before a final Accounting Standards Update is issued.
What Is a Stablecoin?
A stablecoin is a digital asset designed to maintain a relatively stable value compared with a reference asset, most commonly a fiat currency such as the U.S. dollar.
For a U.S. dollar-denominated stablecoin, the basic objective is for one token to maintain a value of approximately $1.
Well-known examples include USDC, USDT, PYUSD, and RLUSD.
That is fundamentally different from Bitcoin. Bitcoin does not have an issuer promising to redeem each Bitcoin for a fixed number of dollars, and its market value can fluctuate substantially.
A stablecoin attempts to minimize that volatility, but the label "stablecoin" does not determine its accounting treatment.
One stablecoin may provide a holder with an enforceable contractual right to redeem directly with the issuer for a known amount of cash. Another holder of a similar token may have access only to a secondary market. Reserve assets may consist primarily of cash and short-term Treasury securities, or they may contain assets whose values can fluctuate significantly.
Those distinctions matter.
Bitcoin Provides a Useful Accounting Comparison
FASB significantly changed the accounting for qualifying crypto assets when it issued ASU 2023-08.
ASC 350-60 requires crypto assets within its scope to be measured at fair value, with changes in fair value recognized in net income. The scope requirements include that the asset does not provide the holder with enforceable rights to or claims on underlying goods, services, or other assets.
Assume a company purchases Bitcoin for $80,000.
At year-end, the Bitcoin is worth $105,000.
The company reports the Bitcoin at $105,000 and recognizes a $25,000 gain in current-period net income.
Although the result can resemble fair-value accounting for certain securities, Bitcoin that falls within ASC 350-60 is accounted for under the crypto-asset guidance, not as an equity security under ASC 321.
Stablecoins can present a different problem because some provide contractual rights that Bitcoin does not.
Start With the Rights, Not the Technology
Before deciding where a stablecoin belongs on the balance sheet, an entity should understand what the holder actually owns.
The accounting analysis should consider questions such as:
- Does the holder have an enforceable contractual right to receive cash?
- Is that right directly against the issuer?
- Can the issuer refuse a valid redemption request?
- Is the redemption amount known?
- Are there meaningful fees, waiting periods, minimum redemption amounts, or other restrictions?
- What assets support the issuer's redemption obligation?
Current professional guidance illustrates the distinction. A stablecoin may meet the definition of a financial asset when it gives the holder an enforceable contractual right to receive cash or another financial instrument from the issuer. If those rights are absent, an entity may instead need to evaluate whether the token falls within crypto-asset or other applicable guidance.
In other words:
"Stablecoin" describes the instrument. It is not the accounting conclusion.
What FASB Is Actually Proposing
FASB is not proposing to rewrite the existing definition of a cash equivalent.
The Board considered several approaches, including revising the definition of a cash equivalent and creating a separate definition of a digital cash equivalent. It ultimately chose instead to add illustrative examples showing how the existing ASC 230 definition could apply to certain digital assets.
That distinction is important.
The proposal should not be read as creating an entirely new stablecoin accounting model. It is attempting to explain how certain stablecoins fit, or do not fit, within a framework that already exists.
The proposed examples focus on several important characteristics:
- an on-demand contractual cash redemption right;
- a direct redemption right with the issuer for a known amount of cash; and
- reserve assets maintained by the issuer in segregated accounts on at least a one-to-one basis, relative to outstanding units, using short-term, highly liquid assets.
The proposal also says that entities should consider relevant laws and regulations when establishing their cash-equivalent accounting policies.
There is an important drafting nuance here. FASB chose illustrative examples, not a new definition or separately codified checklist of stablecoin requirements. The characteristics illustrated in the examples clearly drive FASB's conclusions, but it is more precise at this stage to describe them as attributes demonstrated by the proposed guidance rather than as a formal three-part test.
The proposal therefore does not establish a blanket rule that stablecoins qualify as cash equivalents.
Instead, it illustrates circumstances in which certain digital assets may satisfy the existing ASC 230 definition.
Eligibility and Classification Are Two Different Decisions
This is one of the most important parts of the proposal.
ASC 230-10-45-6 already provides that not every investment satisfying the definition of a cash equivalent must actually be treated as one. Instead, an entity establishes a policy identifying which qualifying short-term, highly liquid investments it treats as cash equivalents.
FASB is not proposing to eliminate that existing policy framework for stablecoins.
The analysis therefore has two separate stages.
First, can the asset qualify as a cash equivalent under ASC 230?
If the answer is no, the entity cannot present it as a cash equivalent.
If the answer is yes, the analysis moves to a second question.
Does the entity's established cash-equivalent accounting policy treat that category of qualifying investment as a cash equivalent?
If yes, the entity presents the asset as a cash equivalent.
If no, the asset remains outside cash equivalents.
This is an important limitation on how much consistency the proposal would create.
FASB is attempting to provide a more consistent framework for determining whether certain stablecoins can satisfy the existing definition. It is not requiring every entity to make the same presentation election once the asset qualifies.
At the same time, "elective" should not be confused with "arbitrary."
The entity must establish and disclose its cash-equivalent policy. Under existing ASC 230-10-50-1, a change in that policy is a change in accounting principle.
An entity therefore cannot simply decide from one reporting period to the next whether classifying a qualifying stablecoin as a cash equivalent produces a preferable financial statement presentation.
Three Companies, One Stablecoin, Different Accounting Conclusions
Consider three companies that hold the same dollar-denominated stablecoin.
Assume the issuer has designed the token to maintain a value of $1 and maintains high-quality reserves.
The accounting result can still differ because the holder's contractual rights and the entity's accounting policy matter.
Company A: It Qualifies, and the Company's Policy Includes It
Company A maintains an account directly with the stablecoin issuer.
Company A has a contractual right to redeem the tokens directly with the issuer on demand for $1 per token. There are no significant redemption fees or restrictions.
The issuer maintains segregated reserves on at least a one-to-one basis using cash and short-term U.S. Treasury bills.
Based on the facts illustrated in the proposed guidance, Company A concludes that the stablecoin satisfies the definition of a cash equivalent.
Company A's established accounting policy also treats qualifying stablecoins as cash equivalents.
Result: Company A presents the stablecoin as a cash equivalent.
This closely follows FASB's proposed Case A.
Company B: It Qualifies, but the Company's Policy Does Not Treat It as a Cash Equivalent
Company B holds the same stablecoin and has the same contractual redemption rights.
The issuer maintains the same reserves, and the stablecoin has the characteristics illustrated by FASB as supporting a cash-equivalent conclusion.
The difference is Company B's established accounting policy.
Company B's policy does not treat qualifying stablecoins as cash equivalents.
Under ASC 230-10-45-6, the fact that an investment qualifies does not require the entity to classify it as a cash equivalent.
Result: Company B does not present the stablecoin as a cash equivalent.
But that conclusion answers only the ASC 230 presentation question.
Company B still must determine the underlying accounting model applicable to the asset. Depending on the stablecoin's contractual terms and rights, that analysis may involve financial-asset guidance, including a receivable or another financial asset, derivative guidance, or crypto-intangible guidance, as applicable.
The cash-equivalent policy election does not determine that underlying accounting model.
That distinction is important. Electing not to present a qualifying stablecoin as a cash equivalent does not automatically transform it into a Bitcoin-like crypto asset or any other predetermined accounting category.
Company C: The Token Trades at Approximately $1, but the Holder Cannot Redeem Directly
Company C holds the same stablecoin but obtained its tokens through an exchange.
The token trades in an active secondary market and normally trades very close to $1.
Company C, however, does not possess the contractual right to redeem the tokens directly with the issuer for $1.
Under FASB's proposed Case B, secondary-market liquidity alone does not produce the same conclusion as a direct contractual redemption right.
FASB's example concludes that the token does not satisfy the cash-equivalent definition because the holder cannot redeem directly with the issuer for a known amount of cash.
Result: Company C cannot rely merely on the existence of an active $1 secondary market to classify the token as a cash equivalent.
The proposed ASU does not prescribe a single alternative accounting model when a stablecoin does not qualify as a cash equivalent. Company C would instead return to the underlying rights-and-obligations analysis described above to determine the applicable GAAP model.
Reserve Quality Matters Too
FASB's third example demonstrates why simply calling a stablecoin "fully backed" is not enough.
In Case C, the holder has a direct redemption right, but the issuer's reserves consist of crypto assets and gold rather than cash and short-term, highly liquid assets.
FASB concludes that the digital asset does not meet the cash-equivalent definition because the reserve assets expose the arrangement to more than an insignificant risk of changes in value.
This produces an important distinction:
One-to-one backing describes the quantity of the reserves. It does not necessarily describe their quality or liquidity.
A token backed by $1 of volatile assets does not present the same liquidity and value-preservation characteristics as a token backed by $1 of cash and short-term Treasury securities.
Not a Cash Equivalent Does Not Automatically Mean ASC 350-60
This distinction is particularly important when analyzing stablecoins.
ASC 350-60 applies only when specified scope requirements are met. Among those requirements, the crypto asset cannot provide the holder with enforceable rights to or claims on underlying goods, services, or other assets.
A stablecoin carrying an enforceable contractual right to receive cash may therefore raise a financial-asset question that does not exist with Bitcoin.
That is why a stablecoin that is not presented as a cash equivalent does not automatically fall within ASC 350-60.
The analysis should proceed in the following order:
What does the holder actually own?
Then:
What recognition and measurement guidance applies to that asset?
Then:
Does the asset satisfy the ASC 230 definition of a cash equivalent?
And finally:
If it qualifies, does the entity's established accounting policy actually treat that category as a cash equivalent?
Those questions should not be collapsed into a single conclusion.
FASB Is Reducing Inconsistency, Not Eliminating It
One reason FASB undertook the project was diversity in practice.
Stakeholders reported uncertainty over whether certain stablecoins meet the existing definition of cash equivalents, which has led to different conclusions in practice.
The proposed examples should reduce some of that diversity.
An entity would have a clearer framework for evaluating whether attributes such as direct issuer redemption, known cash amounts, reserve segregation, and reserve quality support cash-equivalent treatment.
But the proposal does not eliminate diversity because ASC 230-10-45-6 remains intact.
Because the existing accounting-policy election remains, two entities holding the same qualifying stablecoin could still present it differently, and both conclusions could potentially comply with U.S. GAAP if each entity applies its established policy appropriately and consistently.
FASB therefore appears to be preserving the long-standing ASC 230 policy model rather than creating a special mandatory classification rule for stablecoins.
The practical result is significant:
The proposal could make stablecoin accounting more disciplined without making it completely uniform.
The Disclosure Proposal May Affect Far More Companies Than Stablecoins
The stablecoin examples will probably receive most of the attention, but proposed ASC 230-10-50-1A could affect a much larger population of financial statement preparers.
Under the proposal, an entity that presents assets as cash equivalents would be required, in annual reporting periods, to disclose the significant components and related amounts of each component presented as cash equivalents.
FASB gives examples including:
- U.S. Treasury bills
- commercial paper
- stablecoins
- money market funds
It applies to entities that present assets as cash equivalents under ASC 230-10-45-6. An entity that presents no assets as cash equivalents would not be subject to the new requirement.
This is a substantive change from merely disclosing the company's accounting policy.
Existing ASC 230-10-50-1 tells users how the entity decides what it treats as a cash equivalent.
Proposed ASC 230-10-50-1A would also tell users what significant types of assets are actually included in that balance and the amount of each significant component.
What That Could Look Like
Assume a company reports:
Cash and cash equivalents: $20 million
Of that amount, $5 million represents bank cash and $15 million consists of cash equivalents:
- Money market funds: $8 million
- U.S. Treasury bills: $5 million
- Commercial paper: $2 million
That distinction is important.
Proposed ASC 230-10-50-1A is a disclosure of the significant components of cash equivalents. It is not a new requirement to disaggregate every component of ordinary cash.
If the company instead had a significant qualifying stablecoin balance included in cash equivalents, stablecoins could become one of the disclosed components.
FASB has not proposed a numerical threshold defining "significant," so judgment would still be necessary regarding the appropriate level of disaggregation.
Why the Additional Disclosure Matters
A balance sheet caption reading "Cash and cash equivalents" can make liquidity appear relatively straightforward.
The underlying composition may be considerably more varied.
Two companies could each report $20 million of cash and cash equivalents while holding materially different cash-management instruments.
One could hold primarily bank deposits and Treasury bills.
Another could hold substantial money market funds, commercial paper, and qualifying stablecoins.
The headline number may be identical, but the assets making up the balance are not.
The proposed disclosure would give financial statement users more information about what is actually included within the cash-equivalent portion of that number.
It also provides an important counterbalance to the accounting-policy election retained in ASC 230-10-45-6.
FASB may not require every entity to classify every qualifying instrument identically, but users would receive more information about what each entity has chosen to include.
Financial Reporting, the GENIUS Act, and Tax Treatment Are Separate Questions
The GENIUS Act created a federal regulatory framework for payment stablecoins, including requirements involving permitted issuers, reserve assets, and redemption.
That regulatory framework does not, by itself, determine either the U.S. GAAP classification or the federal income tax treatment of a stablecoin.
Current IRS guidance treats digital assets as property for federal income tax purposes and expressly includes stablecoins within the definition of digital assets. Treasury and the IRS have also indicated that they are considering whether payment stablecoins should be treated as cash or cash equivalents for certain federal income tax purposes as the regulatory framework continues to develop.
That tax analysis is separate from FASB's financial-reporting framework.
A stablecoin that qualifies for presentation as a cash equivalent under U.S. GAAP does not automatically receive equivalent treatment for federal income tax purposes.
Likewise, regulatory treatment under the GENIUS Act does not automatically determine the appropriate GAAP recognition, measurement, or presentation.
The three analyses need to remain separate:
Regulatory treatment
Financial reporting treatment
Federal income tax treatment
They may interact, but they are not interchangeable.
What Should Companies Be Asking?
For a company holding stablecoins, the accounting analysis should begin before deciding where the token belongs on the balance sheet.
Management should understand:
- what rights the company actually possesses;
- whether the company can redeem directly with the issuer;
- whether redemption is for a known amount of cash;
- whether redemption is available on demand;
- whether meaningful fees, minimums, waiting periods, or other restrictions exist;
- what assets support the issuer's redemption obligation;
- whether those reserves are segregated;
- whether sufficient information is available to evaluate the amount and composition of those reserves;
- whether applicable laws or regulations affect the classification;
- what underlying recognition and measurement model applies to the asset;
- whether the asset can satisfy the ASC 230 definition; and
- whether the company's established cash-equivalent policy includes that type of qualifying investment.
The Larger Accounting Issue
FASB's proposal reflects a broader development in digital-asset accounting.
Accounting conclusions increasingly depend on the economic and contractual characteristics of an asset rather than simply on the technology through which it exists.
Bitcoin may be a crypto asset measured at fair value through earnings under ASC 350-60.
A stablecoin carrying enforceable cash-redemption rights may require analysis as a financial asset.
A stablecoin with the attributes illustrated in FASB's proposal may also satisfy the existing definition of a cash equivalent.
Even then, presentation as a cash equivalent would remain subject to the entity's established ASC 230 accounting policy.
FASB is not proposing to change the existing definition of a cash equivalent or to require every qualifying stablecoin to be presented as one.
Instead, the proposal would illustrate how the existing ASC 230 definition applies to certain digital assets, preserve the existing accounting-policy election over which qualifying investments an entity treats as cash equivalents, and require greater transparency about the significant components actually included in cash equivalents.
The result could be more disciplined and more transparent financial reporting, even if differences among reporting entities do not disappear entirely.
How Gomez CPA Can Help
Businesses holding or transacting in digital assets may need to evaluate more than the token's market price. Contractual redemption rights, reserve structures, accounting policies, financial statement presentation, disclosures, and tax consequences can all affect the analysis.
Gomez CPA can assist businesses with evaluating digital-asset accounting issues, documenting accounting-policy conclusions, reviewing financial statement presentation and disclosures, and considering related federal tax implications.
Because the FASB guidance discussed in this article remains proposed, entities that could be affected should also monitor the final standard and reassess their conclusions if the final guidance differs from the exposure draft.
Technical References and Further Reading
Authoritative guidance
- Financial Accounting Standards Board, Proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Cash Equivalents, Disclosure Enhancement and Evaluation of Certain Digital Assets, issued August 18, 2026, File Reference No. 2026-ED400.
- Financial Accounting Standards Board, Accounting Standards Codification Topic 230, Statement of Cash Flows.
- Financial Accounting Standards Board, ASU 2023-08, Intangibles, Goodwill and Other, Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, December 2023.
- Guiding and Establishing National Innovation for U.S. Stablecoins Act, Public Law 119-27, July 18, 2025.
- Internal Revenue Service, Frequently Asked Questions on Digital Asset Transactions, including Q47 through Q49 and Q100, updated December 15, 2025.
- U.S. Department of the Treasury and Internal Revenue Service, Internal Revenue Bulletin 2026-18, April 27, 2026.
Professional interpretive guidance
- KPMG LLP, Handbook: Crypto Assets, April 2026.
- KPMG LLP, FASB Issues Proposed ASU on Cash Equivalents, August 2026.
- Deloitte & Touche LLP, Heads Up: FASB Proposes Enhancements to Disclosures About Cash Equivalents and Clarifications to the Evaluation of Certain Digital Assets, August 2026.
Disclaimer
This article provides general information concerning accounting, financial reporting, regulatory and tax matters and is not intended to constitute accounting, audit, tax, legal or other professional advice. The FASB guidance discussed is a proposal and is not authoritative U.S. GAAP. Its provisions may change before a final Accounting Standards Update is issued. The accounting, regulatory and tax treatment of a stablecoin depends on the specific contractual rights, facts and circumstances, accounting policies and applicable law. Businesses should consult qualified professional advisers regarding their particular circumstances.
Information is current as of October 2026.
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