The Financial Accounting Standards Board has proposed a change to US accounting rules that would allow some stablecoins to be classified as cash equivalents. The draft would apply only to tokens that meet specific reserve and redemption conditions.
According to the proposal, a stablecoin could qualify if its issuer holds liquid reserve assets in excess of the number of tokens in circulation and allows holders to redeem the token for US dollars at any time. Issuers would also need to disclose the makeup of those reserves each year.
Draft aims to clarify US GAAP treatment
FASB said the amendment is intended to clarify how the existing definition of cash equivalents under US GAAP should be applied to certain digital assets. The board framed the proposal as a way to use specific examples to explain how current accounting concepts would work in the case of some stablecoins.
The issue has remained unsettled, with uncertainty over whether stablecoins can be accounted for as assets equivalent or similar to cash. That lack of clarity has raised concerns that similar holdings could end up being treated differently across companies.
Conditions for stablecoins to qualify
The draft does not suggest blanket treatment for all stablecoins. Instead, it sets out conditions tied to the issuer’s reserves and redemption terms.
Under the proposal, the issuer would need to hold liquid reserve assets greater than the total amount of tokens outstanding. The stablecoin would also need to be redeemable into US dollars at any time, and the issuer would have to provide annual disclosure on the composition of the reserve assets backing the token.
Where qualifying tokens would fit
If the amendment is adopted, qualifying stablecoins could be included within the accounting category of highly liquid cash-equivalent assets. That would place them alongside instruments such as US Treasuries, commercial paper and money-market funds for reporting purposes.
The proposal therefore addresses accounting presentation rather than making a broader statement about all digital assets. Its practical effect would depend on whether a particular stablecoin satisfies the stated criteria.
Comment period runs through Nov. 19
FASB is accepting feedback on the proposal from industry participants and other stakeholders through Nov. 19. After that review, the board is expected to move to follow-up steps as it considers whether to establish a final standard.
For now, the amendment remains a proposal rather than a completed rule. The next confirmed milestone is the end of the comment period, which will help determine how FASB proceeds with the final version.
Source: en.bloomingbit.io