Securities Regulation Daily Wrap Up, ACCOUNTING AND AUDITING—FASB seeks comment on enhanced cash equivalent disclosure for digital assets, (Aug 18, 2026)

By Suzanne Cosgrove

The Board said it aims to clarify whether certain digital assets, including stablecoins, meet the definition of cash equivalents under GAAP.

The Financial Accounting Standards Board (FASB) has published a proposed accounting standards update (ASU) intended to clarify how the current definition of cash equivalents applies to certain digital assets, such as stablecoins, and to increase transparency about the significant components of cash equivalents.

The update is a response to feedback the Board received from stakeholders who said they were uncertain about whether certain digital assets, including stablecoins, meet the definition of cash equivalents under current generally accepted accounting principles (GAAP).

That uncertainty has led to diversity in practice, the Board said in a release.

Definitions. To address that stakeholder feedback, the proposed ASU provides illustrative examples to improve comparability among entities that elect to present qualifying digital assets as cash equivalents. The proposal would not change the current definition of the term “cash equivalents.”

Cash equivalents are defined as short-term, highly liquid investments that are readily converted to known amounts of cash or are so close to maturity that they have an insignificant risk of change in value because of interest rate changes. Generally, only investments with original maturities of three months or less qualify under that definition.

An entity is required to have an accounting policy about assets that are presented as cash equivalents, FASB noted.

In addition, the new guidance requires entities to provide enhanced disclosures of significant components and related amounts of cash equivalents, regardless of whether any of those assets are digital assets. The proposed disclosure would provide investors and other financial statement users with more transparent information about the significant components of cash equivalents, FASB said.

Examples. The amendments in the proposed FASB update explain, through illustrative examples, how the current definition of cash equivalents applies to certain digital assets.

The proposed illustrative examples apply to entities that have certain digital assets. The proposed disclosure requirements apply to entities that present assets as cash equivalents.

Not all investments that qualify are required to be treated as cash equivalents, FASB said. An entity needs to establish a policy concerning which short-term, highly liquid investments that satisfy the definition of cash equivalents are treated as cash equivalents.

For example, a company having banking operations might decide that all investments that qualify except for those purchased for its trading account will be treated as cash equivalents, while a company whose operations consist largely of investing in short-term, highly liquid investments might decide that all those items will be treated as investments rather than cash equivalents.

In addition, any change in an entity’s policy for determining items treated as cash equivalents will be viewed as a change in accounting principle, which requires a restatement of prior financial statements for comparative purposes.

Nov. 19 comment deadline. The proposed ASU, including information on how to submit comments, is available at the FASB website.

Stakeholders are encouraged to review the document and provide comments on the proposed ASU by November 19, 2026.

RegulatoryActivity: AccountingAuditing Blockchain