Stablecoin Accounting Gets Close Look as Coins Treated Like Cash

PayPal Holdings Inc. and Coinbase Global Inc. are navigating a gray area in US accounting rules by treating popular digital coins akin to cash on their balance sheets, their latest annual reports show.

The judgment calls come as the Financial Accounting Standards Board meets Wednesday to kick off a discussion of staff research and public input on whether certain digital assets like stablecoins can be classified as highly liquid, short-term investments alongside US Treasury bills and money market funds. The board took up a project on this question in October, as crypto industry groups clamored for further clarity.

Board members are expected to vote on whether to provide examples in the existing statement of cash flows guidance to clarify whether certain digital coins meet the “cash equivalents” definition, according to a meeting memo. They’ll also decide if they want to draft a proposal for public input.

Investors look to the “cash and cash equivalents” line item on corporate balance sheets to assess businesses’ most liquid assets. The category is reserved for investments so close to maturity they’re effectively as good as cash in the bank.

Crypto exchange Coinbase noted in its latest annual financial report that it chose to change the way it classified payment stablecoins as of Dec. 31, 2025. The change was applied retrospectively, bumping up the $8.5 billion it had originally recorded as its total cash and cash equivalents for the 2024 fiscal year to $9.3 billion.

The company didn’t respond to a request for comment on its decision-making process for the accounting treatment of stablecoins.

Broadly speaking, the current accounting ambiguity can lead to added work for companies, said Jeff Rundlet, vice president of institutional solutions at Cryptio, a back-office operating system for regulated institutions with digital assets.

“If there’s no real clarity on how to do it from an accounting perspective, the CFO or CAO might just say, ‘Let’s not hold stablecoins,’” Rundlet said. “We’ve heard this: ‘Let’s transfer out of stablecoins at the end of the month.’”

Growing Industry

As companies weigh where to fit stablecoins in financial filings, financial services giants including Wells Fargo & Co. and American Express Co. have deepened their explanations of business risks posed by cryptocurrencies in their latest annual reports.

Digital assets such as stablecoins “have the potential to reduce reliance on traditional depository institutions” and could lead to a decrease in deposits at banks, Wells Fargo wrote.

The company is working to develop a stablecoin to facilitate “efficient, low-cost payments,” Chairman and CEO Charles Scharf said in a March annual letter to shareholders.

Stablecoins are designed to maintain a stable value relative to a reference asset like the US dollar in order to facilitate faster and cheaper payments across borders compared to traditional currency systems. Total stablecoin payment flows could reach $56 trillion by 2030, according to a Bloomberg Intelligence analysis.

American Express’s annual report referenced the Genius Act, signed into law last July, saying the new US regulatory framework for stablecoins could alter its competitive landscape by facilitating alternative payment or financing mechanisms.

“The question to be asked is, ‘Is that a bad thing or does that actually lead to more innovation that ends up benefiting consumers?’” said Aaron Jacob, senior adviser at digital asset compliance firm Taxbit and associate professor at Brigham Young University.

Cash Equivalents

Coinbase told investors in its latest financial report it would no longer treat payment stablecoins as financial instruments, instead classifying them as cash equivalents.

The accounting change “better reflects” the economic substance of such coins, including Circle Internet Group Inc.'s popular USDC, Coinbase’s report filed Feb. 12 said.

“USDC is readily convertible to known amounts of cash, allowing for near-instant, one-to-one redemption of USDC for U.S. dollars,” the report said.

Cash equivalents under accounting rules are investments that are readily convertible to known amounts of cash and so near their maturity they present “insignificant risk of changes in value” due to interest rate fluctuations.

Not all investments that qualify are required to be treated as cash equivalents, and companies should establish policies for which ones are recorded that way, according to accounting rules.

Payments platform PayPal said in its annual filing that its cash and cash equivalents include its stablecoin. PayPal USD, or PYUSD, is pegged to the US dollar.

Securities and Exchange Commission staff have provided stop-gap guidance that certain stablecoins could be treated as cash.

There “should be a very high bar” in terms of what is included in the cash and cash equivalent line item, FASB member Frederick Cannon emphasized during the board’s October meeting on the topic.

Still, Cannon agreed with the majority of the board to add a project focused on cash equivalents given public input seeking specific guidance.

The board will also discuss Wednesday a separate project focused on accounting for transfers of crypto assets, which similarly came up in 2025 agenda outreach as an area for potential standard-setting.

“We look forward to a robust Board discussion,” FASB spokesperson Christine Klimek told Bloomberg Tax in a statement.