The Financial Accounting Standards Board has proposed three tests that would let a stablecoin sit on a corporate balance sheet as a cash equivalent — and the most commercially consequential of them is not about the token at all. It is about whether the company holding it has an account with the issuer.
That distinction sits in the illustrative examples of the exposure draft FASB issued on August 18, 2026, and it turns a technical clarification into a sorting mechanism for the stablecoin industry. Two corporate treasurers can hold the identical token, from the same issuer, against the same reserves, and land on opposite classification answers. The one with a direct contractual redemption right books it beside Treasury bills. The one who bought on a secondary market does not.
What FASB actually proposed
The document is titled Proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Cash Equivalents—Disclosure Enhancement and Evaluation of Certain Digital Assets, issued under File Reference No. 2026-ED400 and open for comment until November 19, 2026. All seven board members approved it for publication.
Critically, it rewrites nothing. The Master Glossary definition of cash equivalents is left untouched; FASB adds illustrative examples instead, because, as the basis for conclusions puts it, the current definition “is intentionally narrow and, therefore, not all stablecoins would qualify.” The three attributes it illustrates are an on-demand contractual cash redemption right; a direct redemption right with the issuer for known amounts of cash; and segregated reserve assets held by the issuer on at least a one-to-one basis, relative to units in circulation, in short-term, highly liquid assets.
Separately, and with far broader reach, every entity presenting cash equivalents would have to disclose their significant components and amounts annually — Treasury bills, commercial paper, money market funds, stablecoins — digital assets or not.
The three cases, and how holders fail them
FASB works the tests through three hypothetical cases. In Case A, the holder has an account with the issuer and an on-demand right to redeem at $1 per unit with no significant fees or restrictions, and the issuer segregates reserves in cash and Treasury bills of three months or less. That qualifies.
Case B changes one fact: the holder has no account with the issuer and no direct redemption right, only an active secondary market where units trade at roughly $1. FASB’s conclusion is blunt — the units are “not readily convertible to known amounts of cash,” and they fail. Indirect rights routed through intermediaries, the board reasoned, introduce counterparty credit risk that makes conversion “less direct and less certain.” For a treasury function that reaches stablecoins through an exchange or a broker rather than a mint-and-redeem account, that is the whole ballgame.
Case C keeps the direct redemption right but swaps the reserves for crypto assets and gold. Those fail too, because reserve value can move for reasons unrelated to interest rates. Overcollateralisation does not automatically disqualify a token, FASB adds, but only short-term, highly liquid assets count toward the one-to-one test. Read as criteria rather than verdicts, that is comfortable for fiat-reserve designs with published redemption programmes and awkward for crypto-collateralised and commodity-backed structures. FASB has ruled on no specific token.
Why treasurers care
The stakes are mundane and large. A treasurer cannot run operating liquidity in an asset the auditor parks outside cash and cash equivalents.
FASB Chair Richard Jones framed the intent in an interview with Accounting Today: “I think that will be helpful for people because it takes away the uncertainty.” A stablecoin, he added, “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.”
The proposal also asks whether entities should weigh relevant laws and regulations — the GENIUS Act is named directly — when setting policy, though FASB says no legal opinion should be required. That reaches the institutions building issuance and settlement rails, from stablecoin clearing banks to permissioned validator sets, and sharpens a competitive line against tokenised deposits and tokenised money market funds, whose treatment was never in doubt. Anyone running digital asset reporting at scale faces a second problem: entities need enough information about an issuer’s reserves to make the assessment at all.
Nothing is settled. FASB has not set an effective date and will decide after reviewing comment letters, with early adoption permitted. As CPA Practice Advisor noted, the proposal reaches every entity presenting cash equivalents, not just crypto-native ones. The more revealing signal will be whether issuers start marketing direct redemption accounts to corporates, because Case B says that is now the difference between an asset that reads as cash and one that does not.
This article is informational analysis only and is not financial, investment, or trading advice. Cryptocurrencies are highly volatile and can lose substantial value rapidly. Past performance and historical patterns do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.
Karthik Subramanian
Karthik Subramanian is a founder, writer, and technology consultant with nine years in the crypto ecosystem. He covers token economics, L1/L2 infrastructure, DeFi protocols, wallets/custody, and the bridge between crypto and forex—broker technology, liquidity, and macro drivers. Karthik’s writing focuses on clear, practical frameworks that help professionals evaluate new products and on-chain innovation alongside FX market realities.
