The U.S. standard-setting organization accounting made an important proposal for stablecoins on Tuesday, answering uncertainties about whether stablecoins could be considered the same as cash under common accounting practices.
Stablecoins that have liquid reserves (whose contents are disclosed each year) at least equal to the circulating tokens, which can be cashed in for dollars at will, can be considered "cash equivalents," the Financial Accounting Standards Board said in the proposal.
"The amendments in this proposed update would clarify, through illustrative examples, how the current definition of cash equivalents applies to certain digital assets," the board said in its proposal, which was issued in answer to an ongoing dispute over how stablecoins are viewed, which it said could create different accounting treatments depending on the source.
FASB sets the industry standards for generally accepted accounting principles (GAAP), and its proposal would add stablecoins to the array of highly liquid, cash-like assets, also including Treasuries, commercial paper and money market funds.
The organization, which began establishing crypto-specific accounting rules in 2023, issued the draft of what it calls an "accounting standards update" outlining the changes the board is suggesting and why they made their decisions. It's not yet a final determination, and the board invites public comment until November 19.
Read More: FASB Says Crypto Assets Should Be Marked at Current Values