FASB proposes stablecoin disclosures

The Financial Accounting Standards Board issued a proposed accounting standards update Tuesday aimed at clarifying how the current definition of cash equivalents applies to certain digital assets, such as stablecoins, and to increase transparency about the significant components of cash equivalents. 

During an agenda consultation project last year and through other feedback, FASB's stakeholders pointed to uncertainty about whether certain digital assets, including stablecoins, meet the definition of cash equivalents under current U.S. GAAP. That uncertainty has resulted in diversity in practice. 

During a meeting in April, FASB decided to direct its staff to draft a proposed accounting standards update to address the changes in accounting for digital assets and cryptocurrency such as stablecoins.

To address the feedback provided by stakeholders, the proposed ASU would provide illustrative examples to promote more consistent application of that definition and improve comparability among entities that elect to present qualifying digital assets as cash equivalents. The proposal wouldn't change the current definition of the term "cash equivalents." 

It would also require all entities to provide enhanced disclosures of significant components and related amounts of cash equivalents, regardless of whether any of those assets are digital assets. That proposed disclosure would provide investors and other financial statement users with more transparent information about the significant components of cash equivalents.

The proposed illustrative examples would apply to entities that have certain digital assets. The proposed disclosure requirement would apply to entities that present assets as cash equivalents.

FASB chair Richard Jones explained the intention during a recent interview with Accounting Today. "In areas like disclosure of cash equivalents, which also deals with stablecoins, that is an area that will be broadly applicable, and I think we will hear from a broad array of stakeholders," said Jones. "Some of the other areas, like accounting for commodities, tend to be a little more specialized, and I think we'll hear more from entities that have a commodity trading portfolio, as opposed to the general manufacturing companies, whereas cash equivalents would apply to all."

FASB has long had a definition of cash equivalents, but stablecoin is a new type of financial instrument that could function as a cash equivalent.

"What our project does is focus on here's the existing definition, and here's the application of that definition in some fact patterns that are fairly common," said Jones. "I think that will be helpful for people because it kind of takes away the uncertainty. Stablecoin is kind of like private credit in the sense that whenever someone says it, you can't have a conversation until they tell you about the terms of it. With a stablecoin, the question comes about, 'What does that mean? Do you have a right to cash? Is it a right to cash on demand? What's backing that right to cash? Is this more like a money market fund, or is it more like another type of simple digital asset that really is enclosed here?' We certainly saw that there was an evolution in what was happening in the marketplace, and that people had questions about the application of our guidance to some of those transactions. Our hope is we can bring clarity and consistency and reduce the uncertainty in those areas."

(Read more: FASB chair plans for new standards, semiannual reporting)

"This is one of those areas that, coupled with the transfer of digital assets, where the President's Working Group On Digital Asset Markets recommended that they be referred to the FASB," he added. "That's a great sign that when issues of accounting and financial reporting come up, that people view us as the answer. Our due process and our thoughtful consideration and outreach with stakeholders is the ideal way to reduce uncertainty related to financial and accounting reporting."

Last year, Congress passed the GENIUS Act last year, a law that sets up a regulatory framework for stablecoins, a form of digital assets pegged to a fiat currency like the U.S. dollar. On Monday, the Treasury Department issued proposed rules on a section of the law governing who may issue, offer, sell or otherwise make available payment stablecoins.

The proposed ASU, including information on how to submit comments, is available here.

FASB is asking stakeholders to review and provide comments on the proposed ASU by Nov. 19, 2026.