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Not yet, and possibly not even if the rule passes. On 18 August 2026, the Financial Accounting Standards Board proposed guidance clarifying when a stablecoin may be classified as a cash equivalent under US GAAP, built around a three-part test.
The test is stricter than most coverage has conveyed. One condition requires a direct redemption right with the issuer, and FASB has been explicit that secondary-market liquidity alone does not satisfy it. Read against the redemption terms Tether and Circle actually publish, that condition would exclude a large share of the companies hoping to benefit. This guide covers the current treatment, the proposed test, who would qualify, and what remains unresolved.
The proposal asks whether you can redeem with the issuer, not whether you can sell on an exchange. For most corporate holders those are very different questions, and only one of them has a yes.
Key Takeaways
- The proposal is not final. Comments are open until 19 November 2026.
- Three conditions must all be met. Missing one disqualifies the holding entirely.
- Selling on an exchange does not count. A direct issuer relationship is required.
- The definition itself is unchanged. FASB is adding examples, not rewriting the rule.
- Disclosure changes reach every company. Not only those holding digital assets.
How Stablecoins Are Treated Today
The reason this proposal exists is that US GAAP never contemplated a token that claims to be a dollar.
Absent specific guidance, companies holding stablecoins have generally classified them as indefinite-lived intangible assets. Under that treatment, a holding is written down when its value declines and cannot be written back up when the value recovers, which is an awkward result for an asset engineered to sit at one dollar.
FASB acknowledged the underlying problem directly, noting that stakeholders raised uncertainty about whether certain digital assets meet the cash equivalents definition and that the uncertainty produced diversity in practice. Two companies holding the same token could reasonably reach different conclusions.
The Three-Part Test
The proposed Accounting Standards Update sets out three conditions. All three must hold.
| Condition | What it requires |
|---|---|
| On-demand contractual redemption right | The holder must have a contractual right to redeem at any time |
| Direct redemption with the issuer | Redemption must be with the issuer for a known amount of cash, not via a secondary buyer |
| Segregated 1:1 reserves | The issuer must hold at least one-to-one reserves in segregated, short-term, highly liquid assets |
The second condition carries the most weight, and FASB has been unambiguous that secondary-market liquidity alone would not be enough. Being able to sell a token on an exchange does not make it a cash equivalent.
Board discussion during development reinforced the point. Member Joyce T. Joseph described the on-demand contractual right with a direct issuer as the characteristic demonstrating that a stablecoin functions more like cash and less like a speculative token.
The third condition is worth reading carefully as well, since it specifies segregated reserves in short-term, highly liquid assets rather than reserves in general. What each issuer actually holds against that standard is set out in our guide to what backs Tether.
The Problem Nobody Has Flagged
Set the direct-redemption condition against the redemption terms that the two largest issuers actually publish, and a gap opens.
Tether's fees page states a minimum acquisition or redemption of 100,000 USD, a redemption fee of the greater of $1,000 or 0.1%, and sole discretion to approve accounts. Circle's USDC Terms distinguish between holders with a Circle Mint account and holders without one, stating that holders without an account are not Circle customers and may not redeem, and that Mint is not available to individuals or small businesses.
So the practical question for a finance team is not whether the token is redeemable in principle. It is whether that specific company holds an approved account with the issuer. A company holding $40,000 of USDT bought on an exchange has no direct redemption right at all, and under the proposed test, would not appear to qualify. The mechanics of these gates are set out in our guide to how to redeem a stablecoin for dollars.
The result is that the accounting benefit would sit with institutions large enough to hold an issuer account, and not with the smaller treasuries most often cited as the reason the guidance was needed.
What the Proposal Does Not Change
Two clarifications matter for reading any coverage of this.
The definition of cash equivalents is not being rewritten. FASB proposed adding illustrative examples to the existing definition to promote consistent application, leaving the definition itself unchanged.
And the proposal is not law. Comments are open until 19 November 2026, after which the board will decide whether to issue a final standard and set an effective date. Until then, the current treatment continues to apply.
The Part That Affects Every Company
The second half of the proposal has a broader reach than the stablecoin half and has attracted far less attention.
FASB would require all reporting entities, not only those holding digital assets, to disclose more detailed information about the significant components of their cash equivalents. A company holding no crypto at all would still face expanded disclosure about what its reported cash equivalents actually consist of.
Practitioners have noted that preparers will need to evaluate whether balances require more granular disclosure, update internal controls, and revisit how any stablecoin activity is presented in the statement of cash flows.
Which Tokens Could Qualify
The test sorts tokens into two accounting classes based on structure rather than popularity.
Fully-reserved payment stablecoins with segregated backing and a contractual redemption right are the category the examples are aimed at. Algorithmic and crypto-collateralized tokens, which lack both the reserve structure and the issuer redemption relationship, would remain outside the definition and continue under existing crypto asset guidance.
Reserve composition matters here too, since the condition specifies short-term, highly liquid assets held one-to-one. A token backed partly by volatile or illiquid assets sits in a different position from one backed entirely by cash and short-dated government debt.
The Objection From Inside the Process
Not everyone involved supports the direction, and the criticism is worth stating because it is substantive.
During board deliberations, some argued that accounting for stablecoins as cash equivalents would incorrectly signal to the market that they are as safe as cash. That concern is why the direct-issuer condition was emphasised, since it limits the classification to holders with an actual claim rather than merely an exit route.
The underlying point stands regardless of how the standard lands. A cash equivalent classification describes redemption mechanics and reserve structure, not the absence of issuer risk, and no accounting treatment converts a private liability into a government-backed one, as our guide to whether stablecoins are FDIC-insured sets out.
Conclusion
Do stablecoins count as cash on a balance sheet? Not under current guidance, where they are generally treated as indefinite-lived intangible assets, and only conditionally under what FASB proposed on 18 August 2026.
The three-part test requires an on-demand contractual redemption right, direct redemption with the issuer for a known cash amount, and segregated one-to-one reserves in short-term liquid assets. All three must hold, and the second is the one most likely to fail in practice.
The question a finance team should ask is therefore narrower than the headlines suggest. Not whether stablecoins can be cash equivalents, but whether this company, with this account status and this issuer, holds the direct redemption right the standard would require. For many holders, the honest answer is no.
Read Next:
- How to Redeem a Stablecoin for Dollars
- Are Stablecoins FDIC-insured?
- What Does a Stablecoin Audit Actually Verify?
FAQs:
1. Are stablecoins cash equivalents under US GAAP?
Not currently. Absent specific guidance, companies have generally classified them as indefinite-lived intangible assets, and FASB noted that this uncertainty produced diversity in practice. On 18 August 2026, FASB proposed illustrative examples clarifying when a stablecoin may qualify, but the proposal is not final.
2. What is FASB's three-part test for stablecoins?
A qualifying token needs an on-demand contractual redemption right, a direct redemption right with the issuer for a known amount of cash rather than through a secondary buyer, and issuer reserves of at least one-to-one held in segregated, short-term, highly liquid assets. All three conditions must be met.
3. Does selling a stablecoin on an exchange count as redemption?
No. FASB has been explicit that secondary-market liquidity alone would not satisfy the test, since holders need a direct redemption right with the issuer. This is significant because Tether publishes a 100,000 USD redemption minimum with discretionary account approval, and Circle states that Mint accounts are not available to individuals or small businesses.
4. When would the new stablecoin accounting rules take effect?
No effective date has been set. The comment period runs until 19 November 2026, after which the board will review responses and decide whether to issue a final standard, so current accounting treatment continues to apply in the meantime.
5. Does the FASB proposal affect companies that do not hold stablecoins?
Yes. Alongside the digital asset examples, the proposal would require all reporting entities to disclose more detailed information about the significant components of their cash equivalents, so companies holding no digital assets would still face expanded disclosure obligations.
Disclaimer:
This content is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice; no material herein should be interpreted as a recommendation, endorsement, or solicitation to buy or sell any financial instrument, and readers should conduct their own independent research or consult a qualified professional.
