On August 18, 2026, the Financial Accounting Standards Board (“FASB”) issued a proposed accounting standards update (“ASU”) titled Statement of Cash Flows (Topic 230): Cash Equivalents—Disclosure Enhancement and Evaluation of Certain Digital Assets. The proposed ASU seeks to clarify whether certain digital assets meet the definition of “cash equivalents” on the balance sheet, and to increase the transparency of the significant components of “cash equivalents.”
Background
Currently, cash equivalents under U.S. generally accepted accounting principles (GAAP) are defined as short-term, highly liquid investments that are readily convertible into cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Examples of common cash equivalents include cash invested in money-market funds, Treasury bills and commercial paper. Since the introduction digital assets, without clear guidance, companies have adopted a diversity of practices to account for digital assets on their financial statements.
Key Provisions of Proposed ASU
The proposed ASU will not change the current definition of “cash equivalents.” Instead, to promote consistency of application across companies, it will add a series of illustrative examples of digital assets that qualify as cash equivalents under ASC 230-10-55. The proposed ASU will also require all companies to provide enhanced disclosures regarding the significant components and related amounts of cash equivalents, regardless of whether they are digital assets, to increase transparency of what comprises cash equivalents on a company’s financial statements.
Summary of Illustrative Examples
Below is a summary of the three illustrative examples included in the proposal:
| Fact Pattern | Result | |
| Case A | A stablecoin where the holder has a direct, on-demand contractual redemption right against the issuer for $1/unit, with no significant fees or restrictions, and the issuer maintains segregated reserve assets consisting of cash and Treasury bills with original maturities of three months or less on at least a one-to-one basis. | Meets the definition of “cash equivalent” because the redemption right makes the stablecoin readily convertible to a known amount of cash and the nature of the reserves at the issuer means the risk of value changes from interest rate movements is insignificant. |
| Case B | A stablecoin where the holder does not have a contractual redemption right directly from the issuer but instead relies on active secondary markets where the holder expects to be able to sell at approximately $1/unit. | Fails the definition of “cash equivalent” because the ability to sell on a secondary market is not the same as a contractual redemption right directly from the issuer for a fixed amount of cash. |
| Case C | A stablecoin where the holder has a direct redemption right from the issuer but the issuer’s reserves consist of crypto assets and gold. | Fails the definition of “cash equivalent” because the value of those reserve assets may change for reasons other than changes in interest rates, presenting a more than insignificant risk of changes in value. |
Comment Period
The Proposed ASU includes seven questions on which the FASB is particularly interested in receiving stakeholder feedback, covering the operability of the illustrative examples, the decision-usefulness of the proposed disclosure, transition requirements, effective date considerations, and the overall cost-benefit analysis. Stakeholders are encouraged to review and provide comments on the proposed ASU by November 19, 2026.
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