Key takeaways
- On 18 August 2026, the FASB proposed examples showing when a stablecoin can meet the existing US GAAP definition of a cash equivalent. Comments are due by 19 November 2026, and no effective date has been set.
- The examples point to three attributes: an on-demand contractual right to redeem for cash, a direct redemption right with the issuer for known amounts, and segregated reserves of at least one to one in short-term, highly liquid assets.
- Most businesses hold USDC or USDT through a provider rather than redeeming with the issuer directly, so whether their holdings qualify depends on their own facts. Being able to sell on an exchange isn't the same as a redemption right.
- Under IFRS there's no stablecoin standard: a holding may be a financial asset if it carries an enforceable right to cash, and otherwise falls under IAS 38 or IAS 2. Ask your auditor before year-end.
The short answer
The FASB, which sets US accounting standards, proposed on 18 August 2026 to add examples to the cash flow statement guidance showing when a stablecoin can meet the existing definition of a cash equivalent. The examples point to an on-demand contractual right to redeem for cash, a direct right with the issuer for known amounts, and reserves held at least one to one in short-term, highly liquid assets. Comments are due by 19 November 2026; the effective date will be set later.
For a company holding USDC or USDT through a payment provider, the honest answer today is: it depends on your rights, not on the token's name, and the rule isn't final. Talk to your auditor before year-end, and keep the records that show what you hold, where, and how you can turn it into cash.
Why it matters
A cash equivalent sits on the balance sheet next to cash, alongside Treasury bills and money market funds, and counts as cash in the cash flow statement. If a stablecoin balance doesn't qualify, it's reported elsewhere, sometimes as an intangible asset or a receivable, and movements in and out of it show up as investing or operating cash flows rather than as cash. For a company that holds a working balance in USDC to pay suppliers, that changes how its liquidity looks to lenders, investors and auditors.
What the FASB proposed
The proposed Accounting Standards Update is titled Cash Equivalents (Topic 230): Disclosure Enhancement and Evaluation of Certain Digital Assets.
It keeps the definition. The FASB decided in April 2026 not to redefine "cash equivalent". The proposal adds illustrative examples of how the existing definition applies to certain digital assets, such as stablecoins.
The attributes in the examples, as summarized by PwC:
- An on-demand contractual right to redeem for cash
- A direct redemption right with the issuer, for known amounts of cash
- Reserve assets held by the issuer, segregated, on at least a one-to-one basis, in short-term, highly liquid assets
PwC notes that the proposal "does not establish a separate three-part test": the definition is applied as a whole, on the facts, taking into account laws such as the GENIUS Act. Deloitte adds that the proposal would stop a holder concluding that a stablecoin is a cash equivalent merely because it could be converted through an intermediary or an exchange.
A new disclosure for everyone. Every entity with cash equivalents would disclose their significant components and amounts each year, whether or not it holds digital assets.
Transition. The digital asset part would apply on a modified prospective basis to assets held when the rule is first applied, and the disclosure prospectively. Early adoption is expected to be permitted.
What it means for a company holding stablecoins through a provider
Most companies don't have a Circle Mint account or a direct relationship with Tether. They hold stablecoins in a provider's account or a wallet, and turn them into dollars by selling or converting through that provider. That matters for the second attribute, a direct redemption right with the issuer, and for Deloitte's point that conversion through an intermediary isn't enough on its own.
Questions to work through with your auditor:
- Who can redeem with the issuer? Circle redeems USDC 1:1 for institutional customers through Circle Mint. Tether redeems for verified customers with a minimum of $100,000 and a fee of the greater of $1,000 or 0.1%.
- What does your provider's agreement give you? A contractual right to have your balance paid out in dollars on demand is different from a market sale.
- What backs the token? The issuer's reserve reports, their frequency and who attests to them.
- Where does the issuer stand under the GENIUS Act? PwC notes that the analysis takes laws such as the Act into account. The Act takes effect on 18 January 2027 and sets reserve and redemption rules for permitted issuers; see the GENIUS Act guide.
Under IFRS
There's no IFRS standard specific to stablecoins, and the main interpretation is still the IFRS Interpretations Committee's June 2019 agenda decision on holdings of cryptocurrencies. KPMG's 2026 guidance for holders starts from whether a stablecoin is a financial asset under IFRS 9: that needs a contractual right to receive cash, and KPMG says it's "important to consider the underlying rights and obligations and whether these are substantive and enforceable", including restrictions on redemption or the issuer's discretion to refuse. If a stablecoin isn't a financial asset, it may fall under IAS 38 (intangible assets) or IAS 2 (inventories), the treatment the 2019 decision set out for cryptocurrencies.
What to do before year-end
- List what you hold: token, network, amount, and where, at your provider or in your own wallets.
- Collect the documents that show your rights: your provider's terms, any issuer redemption agreement, and the issuer's latest reserve attestation.
- Agree the classification with your auditor for this year's accounts, under the current rules.
- Reconcile monthly. Match balances on chain or in your provider's statements to your ledger, and keep transaction hashes with invoices.
- Consider commenting. The FASB's comment period runs to 19 November 2026.
How this works with Align
Align holds your balance in USDC or USDT and converts it when you pay out in USD, EUR, GBP or AED from named accounts in your company's name. Align's statements show each payment in and out, which your accountant can reconcile to your ledger. Align doesn't give accounting advice: the classification of your balance is for you and your auditor.
Sources
- PwC Viewpoint, Cash equivalents and digital assets: FASB proposes new guidance (20 August 2026)
- Deloitte, FASB proposes enhancements to disclosures about cash equivalents and clarifications to the evaluation of certain digital assets (19 August 2026)
- KPMG, FASB issues proposed ASU on cash equivalents (August 2026)
- Deloitte, Frequently asked questions about the FASB's crypto assets standard and PwC, Crypto assets guide, chapter 2
- KPMG, Q&A: cryptoassets, stablecoins (June 2026)
- Cointelegraph, US accounting board FASB proposes conditions for stablecoins as cash equivalents (August 2026)
- Tether, Fees; Circle, Circle Mint (accessed November 2026)
Common questions
- Can my company show USDC as cash on its balance sheet?
- Not as cash. The question is whether it can be a cash equivalent, and under the FASB's August 2026 proposal that depends on whether the holding meets the existing definition, judged on the token's terms and your rights as a holder. The proposal isn't final, and until it is, practice varies, so agree the treatment with your auditor.
- Does the FASB proposal change the definition of a cash equivalent?
- No. It keeps the existing definition and adds illustrative examples of how it applies to certain digital assets. PwC's summary stresses that the proposal does not create a separate three-part test: classification still depends on the facts and on laws such as the GENIUS Act.
- What new disclosures would the proposal require?
- Every entity that reports cash equivalents, whether or not it holds stablecoins, would disclose the significant components and their amounts each year, such as Treasury bills, money market funds and stablecoins.
- Is USDT treated the same as USDC?
- Not necessarily. The analysis turns on each token's redemption terms, the issuer's reserves and the holder's rights. Tether redeems directly only for verified customers, with a minimum of $100,000 and a fee. Circle redeems USDC through Circle Mint for institutional customers. A company with no direct redemption right is in a different position from one that has it.
- How are stablecoins accounted for if they aren't cash equivalents?
- Under US GAAP, the FASB's crypto asset rules in ASC 350-60, which require fair value, exclude tokens that give the holder enforceable rights to underlying assets, so fiat-backed stablecoins often fall outside them. Depending on the facts, they may be accounted for under other guidance, for example as a receivable. Under IFRS, KPMG notes a stablecoin may be a financial asset under IFRS 9, or otherwise fall under IAS 38 or IAS 2.
This guide is general information, not legal, tax or financial advice. Rules and providers' terms change; check the sources linked above and take advice on your own situation.