A business may hold a digital asset designed to maintain a stable dollar value, use it to settle payments, and expect to convert it into dollars whenever needed. But those expectations leave an important question unanswered: what rights does the business actually have when it wants its money back?

That question sits at the center of the Financial Accounting Standards Board’s proposal addressing the evaluation of certain digital assets as cash equivalents. The project aims to reduce inconsistent accounting practices and improve transparency around the composition of cash equivalents.

For founders, finance teams, stablecoin issuers, and businesses using digital assets, the practical implication is significant: contractual rights and treasury arrangements deserve attention alongside the technology.

What FASB Is Proposing

Issued August 18, 2026, the proposed update to Topic 230 would retain the existing cash-equivalents definition and add digital-asset examples. It would also require annual disclosure of significant cash-equivalent components and their amounts, including for entities without digital assets. Comments are due November 19, 2026.

The project has two distinct audiences. Businesses holding digital assets need to examine classification. Businesses presenting any assets as cash equivalents need to consider the proposed disclosure changes.

For companies considering stablecoins as part of their treasury strategy, this creates a useful moment to bring legal, accounting, and operational teams into the same discussion.

The Examples Focus on Rights and Reserves

The draft’s qualifying example combines direct, on-demand contractual redemption for $1 per unit, without significant fees or restrictions, with segregated reserves comprising cash and short-term Treasury bills, maintained at least one-for-one.

A second example fails because the holder lacks direct issuer redemption rights, despite an active secondary market. A third fails because the reserves consist of crypto assets and gold.

These examples highlight three areas businesses should investigate.

1. What Does the Holder Have a Right to Receive?

A treasury team should be able to identify the agreement governing redemption and explain what the company can demand under it.

That review should address:

• Which legal entity owes the redemption obligation.

• Whether the company itself is entitled to enforce that obligation.

• What currency or asset the company will receive.

• What fees, minimum amounts, processing conditions, or suspension provisions apply.

• Whether the company has completed the steps needed to exercise its rights.

A product description stating that a token is “redeemable” leaves room for questions. Counsel should trace that statement to an enforceable obligation benefiting the particular holder.

2. Who Can Redeem Directly?

The contrast between the draft’s first two examples makes the holder’s relationship with the issuer especially consequential.

Consider two businesses holding the same token. One has an issuer account and an applicable redemption agreement. The other acquired its tokens through a trading platform and expects to sell them there.

The legal diligence for those businesses should differ. The first should verify its issuer rights and operating conditions. The second should investigate what rights it has against the platform, whether it has any rights against the issuer, and how it would obtain dollars if platform access were interrupted.

The resulting classification assessment belongs with the company’s accounting advisers. Legal review supplies an essential part of the evidence: who owes what to whom.

3. What Supports the Redemption Promise?

Reserve diligence should move beyond a headline claim that a token is “fully backed.”

Useful questions include:

• What assets make up the reserves?

• Where and how are they held?

• What restrictions govern their use?

• What reporting supports statements about their composition and value?

• Can the issuer change the reserve strategy?

• What happens to holders’ claims if the issuer or a reserve custodian becomes insolvent?

These questions also help a board assess whether a proposed treasury allocation fits the company’s needs. A business funding payroll and ordinary operating expenses may have different liquidity requirements from one holding assets for longer-term investment.

The Disclosure Proposal Reaches Beyond Digital Assets

The broader disclosure objective is to give financial-statement users a clearer view of the assets grouped within cash equivalents.

From a business perspective, that visibility can improve conversations about liquidity. Investors and lenders may want to understand how a company’s reported holdings translate into funds available for operations.

Finance teams should consider whether their records can distinguish the relevant asset categories without a manual investigation at year-end. Legal and finance teams should also compare the terminology used across financial statements, board materials, financing documents, and investor presentations.

For example, a fundraising presentation that describes the company’s entire treasury as “cash” may convey a different impression from a schedule separating bank balances, investment products, and digital assets. Consistent, precise descriptions help readers understand the company’s position.

Why This Matters for Financing Documents

Our practical view is that businesses should review their agreements before assuming an accounting conclusion determines a contractual result.

A loan agreement may contain its own definition of cash equivalents. An acquisition agreement may specify which assets count toward closing cash. An investment document may limit how proceeds can be held or deployed.

Businesses considering digital-asset treasury holdings should therefore examine:

Liquidity covenants. Does the agreement specify eligible assets, approved institutions, or restrictions on availability?

Investment restrictions. Does the company’s treasury policy permit the proposed holding, and who must approve it?

Transaction calculations. How would the asset be treated in a purchase-price adjustment, working-capital calculation, or distribution provision?

Reporting obligations. Must the company notify a lender or investor before changing its treasury practices?

These are matters of contract interpretation and transaction design. Resolving them before a significant allocation can prevent disagreement later.

What Stablecoin Issuers Should Consider

For issuers seeking business customers, the proposal offers a reason to examine how clearly their documents explain the holder’s rights.

Corporate customers and their advisers are likely to ask for a coherent account of redemption eligibility, reserve arrangements, fees, restrictions, and suspension rights. Issuers should assess whether their customer agreements, public disclosures, and operational procedures tell the same story.

Particular care is warranted when describing accounting treatment in marketing materials. An issuer should avoid suggesting that every customer can reach the same conclusion without evaluating its own rights and circumstances.

Clear documentation can make diligence more efficient and help customers identify questions that require accounting judgment.

Timing and the Opportunity to Comment

The draft leaves the effective date undecided and contemplates early adoption of a final standard. Qualifying presentation would remain a policy choice. It proposes modified prospective transition for the examples and prospective application of the disclosure requirement.

Businesses with relevant experience can use the comment process to explain where the examples are workable and where additional clarity would help.

Potential topics include redemption through intermediaries, processing delays, fees, restrictions, and the evidence needed to evaluate reserve arrangements. The strongest submissions will explain a specific fact pattern, identify the uncertainty, and propose language or an example that would resolve it.

Preparing for the Discussion Now

Businesses do not need to wait for a final standard to improve their records and documentation.

A useful first step is to inventory digital-asset holdings and connect each holding to its governing agreements, account arrangements, redemption procedures, and available reserve information. Accounting advisers can then evaluate classification with a clearer factual record.

Boards and treasury teams should also document why the holding serves the company’s needs, what limits apply, and how the company would obtain operating funds during a disruption.

FASB’s proposal brings renewed attention to a foundational treasury question: what can the company convert into usable funds, through which rights, and under what conditions?

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This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.