Are stablecoins considered cash? After Trump signs the GENIUS Act, the FASB will provide the answer.

FASB 2026 will study whether stablecoins qualify as cash equivalents and how to account for crypto transfers. Despite the establishment of regulation through the “Genius Act,” GAAP still has gray areas, especially regarding asset derecognition and the definition of wrapped tokens. The current $300 billion stablecoin market is dominated by Tether and Circle, but companies like MicroStrategy and Tesla holding crypto assets cannot record them as cash equivalents, affecting financial disclosures.

FASB 2026 Dual-Topic Accounting Revolution

The Financial Accounting Standards Board (FASB) announced that in 2026 it will examine two crypto-related issues: whether certain crypto assets can be recognized as “cash equivalents,” and how to account for crypto asset transfers. Against the backdrop of increased support for such investments during the Trump administration, these topics will be included in discussions.

Over the past few months, FASB has added these two crypto items to its agenda based on public feedback. These issues are among the earliest of over 70 topics FASB is considering, some of which may develop into new accounting standards in the future. FASB expects to decide on the prioritization of these over 70 potential topics by late summer this year. These topics originated from a “request for agenda items,” where companies, investors, and others can submit letters indicating which issues they want FASB to prioritize.

“Many people have invested significant time and effort to help us develop our work agenda,” said Chairman Rich Jones. “I see 2026 as the year to turn these opinions into action and fulfill our commitments.” In October last year, FASB included the issue of “cash equivalents” in its agenda, focusing on certain stablecoins—assets typically pegged to a fiat currency.

In November last year, FASB voted to study the accounting treatment of corporate transfers of crypto assets, including “Wrapped Tokens”—tokens that allow crypto assets on one blockchain to be represented and used on another blockchain via “mapping.” This project will build on FASB’s 2023 proposal requiring companies to use fair value measurement when accounting for Bitcoin and other crypto assets. This rule filled a gap in US GAAP but does not cover non-fungible tokens (NFTs) or certain stablecoins.

Key Accounting Gray Areas Left by the Genius Act

This move came three months after President Trump signed into law the stablecoin regulation bill. The law established a regulatory framework for stablecoins, further integrating these assets into mainstream finance. Jones stated that the “Genius Act” does not resolve the accounting question of “what can be considered cash equivalents.” He emphasized: “Telling people what does not meet the cash equivalent standard and what does is equally important.”

The core contribution of the “Genius Act” is establishing a regulatory framework for stablecoins, including capital requirements for issuers, reserve audit standards, and consumer protection mechanisms. These regulations move stablecoins out of the regulatory gray area into legitimate financial systems but do not address accounting treatment issues. Regulatory legality does not equate to accounting compliance; they are two entirely different systems.

President Trump and his family have interests in World Liberty Financial, a crypto company, and have introduced policies supporting the crypto industry, halting previous regulatory crackdowns. This political backing provides context for FASB’s research, but Jones emphasizes he has not been pressured to adopt the working group’s recommendations. “Of course, I am pleased that they see the way to address accounting issues is to have FASB evaluate these topics,” Jones said. “They did not suggest legislative action to handle accounting problems.”

Three Major Barriers to Stablecoins Becoming Cash Equivalents

Volatility Issue: Some stablecoins have decoupled, failing to meet the value stability requirement of cash equivalents.

Liquidity Risk: Whether redemption mechanisms can guarantee immediate exchange under extreme market conditions.

Credit Risk: Whether the composition and custody of reserves meet the credit standards of cash equivalents.

With the “Genius Act” coming into effect in 2027, newly established regulatory safeguards are expected to reduce stablecoin volatility, and market interest in stablecoins is anticipated to increase. Sandy Peters, head of the CFA Institute’s Financial Reporting Policy Team, noted, however, that without more comprehensive risk disclosures, investors are unlikely to accept stablecoins as cash equivalents.

Accounting Dilemmas of Derecognition and Wrapped Tokens

Despite accounting requirements related to crypto being proposed in 2023, some still find the specifics unclear. Scott Ehrlich, Managing Director of accounting training and consulting firm Mind the GAAP, said: “I still believe there is a significant gap in current GAAP regarding a key issue: under what circumstances should we derecognize crypto assets from the balance sheet—that is, terminate recognition—and when should we not?”

The accounting treatment of wrapped tokens is particularly complex. When a company wraps ETH into WETH for use on other chains, is that considered an asset transfer? Should the original ETH be derecognized? How should WETH be recorded? If a cross-chain bridge is hacked, preventing WETH from being redeemed, at what point should the loss be recognized? These questions currently lack clear answers in GAAP.

The SEC, responsible for enforcing FASB’s accounting standards for publicly traded companies, will closely monitor any adjustments made by FASB. SEC Chief Accountant Kurt Hohl recently stated: “There are a lot of issues in the crypto industry. The difficulty is that they don’t fit neatly into the existing accounting standards framework.”

Some observers question whether crypto asset holdings have become widespread enough to enter FASB’s agenda. Companies like Tesla, Block, and MicroStrategy that list Bitcoin on their balance sheets are still few. “These new crypto projects don’t seem driven by widespread adoption or other established FASB criteria; rather, they are more driven by current political priorities,” said Sandy Peters.

However, as more companies consider holding stablecoins as financial management tools, the clarity of accounting standards becomes more urgent. When financial statements cannot accurately reflect a company’s true asset position, investors’ decision-making foundations are distorted.