FASB Sets Three Tests for "Cash"

An accounting rule sounds like the dullest news of the week. It may be the most consequential.

Right now a company holding stablecoins has to book them as some awkward "other asset" — which makes treasurers avoid them. Under this proposal, tokens passing three tests get booked as cash: you must be able to redeem on demand, you must have a direct claim on the issuer rather than on whoever sold you the token, and the reserves must be segregated and held one-for-one in safe short-term assets.

Read the tests again and notice what they do. They don't ask whether the technology works. They ask whether there's a company you can sue, holding money you can claim, redeemable on a day you choose. Pass, and you're cash. Fail, and you're a speculative asset on the balance sheet.

That's the third line drawn in Washington this week, after the Treasury's licences and the SEC's rulebook — and this one wasn't even drawn by a regulator. Same direction each time: the versions of this money that can be reached, redeemed and accounted for are welcomed in; the rest stay outside. If you wanted evidence that crypto is being absorbed rather than adopted, it's this — the bookkeeping is being rewritten to fit it, on condition that it fits.