Circle (NYSE: CRCL) co-founder Jeremy Allaire called a new accounting proposal from the U.S. Financial Accounting Standards Board (FASB) a "massive strategic breakthrough" for stablecoins such as $USDC. He stated this on Friday, August 21, 2026.
He said this proposal makes it easier for companies to hold tokens. This came three days after the FASB proposal, which would allow financial institutions and corporations to classify qualifying stablecoins as cash equivalents.
Why Allaire Is Speaking Out About Accounting Rules
Allaire's company, Circle, issues the stablecoin $USDC, and he rated this proposal "nine out of ten". He linked the new policy to the $GENIUS Act and stated that the new accounting changes combined with the passage of the GENIUS Act will pave the way for broader adoption of $USDC.
The euphoria is not without basis. How a stablecoin is reflected on a company's balance sheet determines whether a treasurer will touch it or not. Furthermore, when assessing a borrower's solvency, lenders pay more attention to cash equivalents than to intangible assets.
Thus, a token considered an intangible asset will incur a penalty on the balance sheet, while a token equivalent to cash will not carry such penalties.
What the Financial Accounting Standards Board (FASB) Proposed
On August 18, the board published a proposed update to accounting standards. The update contains additions to section 230, the standard governing the statement of cash flows. The board chose this option over changing the definition of cash.
According to a summary of the proposal by Deloitte, the definition remains unchanged. The only change will affect its application guidance and a new rule requiring every company reporting cash flows to annually disclose their key components, regardless of whether digital assets are used in them or not.
The public comment period ends on November 19, and the FASB has made it clear that the final version of the standard and its effective date will be chosen after reviewing the received feedback. As of now, nothing is decided.
Three Tests a Token Must Pass
The FASB established clear criteria a stablecoin must meet before it can be considered a cash equivalent.
- First, the token holder must have a contractual right to redeem it on demand.
- Second, redemption must be made directly with the issuer for a known amount of cash.
- Finally, the issuer is obligated to maintain segregated reserves of at least one dollar's worth of short-term, highly liquid assets for each token in circulation.
The ability to sell the token on an exchange is not relevant. The FASB believes market prices can deviate from the promised value under stress, so secondary market liquidity alone does not pass the test.
The FASB refused to consider reserves as cash if they contain volatile assets, such as cryptocurrencies or gold. This inevitably leads to the exclusion of algorithmic and over-collateralized tokens, despite them being classified as stablecoins. Compliance with the conditions set by the FASB is more voluntary than mandatory for a qualifying company.
Coinbase Stock Has Already Jumped, But Not Everyone Is Ready
Coinbase (NASDAQ: COIN) began using the new accounting method on December 31, 2025. The company told the SEC that $USDC, EURC, and PYUSD are backed by segregated cash-equivalent reserves and can be redeemed one-to-one.
The company made the changes retrospectively and stated that there were no changes to previously reported assets, liabilities, equity, net income, or earnings per share.
Naturally, this proposal has its skeptics. Hofstra University accounting professor Jack Castonguay expressed relief that the project "did not go further" and still believes allowing stablecoins under cash equivalents is already going too far.
The deadline for submitting comments—November 19—is noteworthy. By then, we will know the opinion of issuers, corporate treasurers, and auditors before the FASB makes a final decision. For now, these two tracks will remain separate.
