America Clarifies Rules for Corporate Digital Dollars

An American proposal provides more clarity on the accounting of digital dollars, aiming to simplify the use of stablecoins. The proposal clarifies when stablecoins can be recorded as cash equivalents, meaning they can be quickly converted into regular money at a predictable amount. Companies must be able to redeem the coins directly with the issuer, and purchases solely through a cryptocurrency exchange are not sufficient. There must be a documented agreement that grants the right to exchange the coins on demand for a known amount of money. Additionally, there must be reserves of at least the same value as the issued coins, which are kept separately and consist of short-term assets. The proposal, published by the Financial Accounting Standards Board (FASB) on August 18, does not change the existing definition of cash equivalents but adds examples. Companies must also provide more information about the assets they include as cash equivalents. Responses to the proposal can be submitted until November 19, after which FASB will decide on any changes. The proposal does not yet have a set effective date and applies to U.S. accounting rules, meaning that there will not automatically be any changes for Dutch companies.

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