SEC Allows Stablecoins to Count as Cash Equivalents Under Strict Conditions

The U.S. Securities and Exchange Commission (SEC) has released interim guidance stating that certain stablecoins may be classified as cash equivalents for financial reporting purposes, provided they meet specific requirements. Under this framework, a stablecoin must maintain a stable peg to the U.S. dollar, hold full reserves, and offer guaranteed redemption rights. The move, announced under the leadership of SEC Chair Paul Atkins, reflects a shift toward clearer and more flexible accounting standards for digital assets [1][2].

This development comes after years of regulatory ambiguity that discouraged banks and financial institutions from engaging with stablecoins. The new guidance aims to reduce compliance risks for lenders by providing a clearer path for including qualifying stablecoins in liquidity portfolios. For institutions, this could streamline balance sheet management and improve reporting accuracy without triggering the same regulatory scrutiny associated with other types of crypto assets [1].

The guidance also signals a broader policy shift at the SEC, which earlier this year clarified that covered stablecoins are not considered securities under federal law. This distinction is key for banks and investors who are seeking a stable regulatory footing to expand their crypto-related operations. The agency’s efforts are part of a larger initiative known as “Project Crypto,” which seeks to establish a more structured regulatory approach for decentralized finance (DeFi), tokenized securities, and custody models [2][5].

The timing of the SEC’s move aligns with recent legislative developments at the federal level. On August 4, 2025, Donald Trump signed a bill into law that introduces the first federal regulatory framework for dollar-backed stablecoins. This action further legitimizes stablecoins as a financial tool and reflects a growing consensus between regulators and industry participants on the need for structured oversight [4].

While the new guidance offers clarity, it also comes with limitations. Only stablecoins that fully collateralize their reserves and demonstrate transparency in operations qualify for the cash-equivalent classification. This means that not all stablecoins will benefit from the change, and institutions must continue to assess the risks associated with each asset. The SEC has also emphasized that ongoing compliance and risk management remain essential components of any stablecoin strategy [5].

For banks, the potential benefits are significant. The ability to treat stablecoins as cash equivalents may enable more efficient liquidity reporting, reduce capital reserve requirements, and open the door for new services such as stablecoin-based lending and payments. This could accelerate the integration of digital assets into traditional financial systems, a trend that has been gaining momentum as stablecoin usage expands across multiple sectors [1].

The broader financial sector is watching closely, with market participants viewing the SEC’s guidance as an early step toward the normalization of digital assets. While the regulatory landscape remains in flux, the SEC’s approach under Chair Atkins suggests a more accommodating stance that could pave the way for deeper institutional participation in the crypto ecosystem [2][5].

As stablecoins continue to grow in scale and utility, their role in global financial infrastructure is expected to expand. The SEC’s interim guidance, combined with recent legislative action, highlights a key turning point in the evolution of stablecoins from speculative assets to regulated financial instruments. For now, the door is opening—but how far it swings will depend on how regulators, banks, and market forces continue to shape this emerging asset class [1][5].

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Source: [1] Blockonomi, [https://blockonomi.com/sec-lets-stablecoins-count-as-cash-banks-are-paying-attention/](https://blockonomi.com/sec-lets-stablecoins-count-as-cash-banks-are-paying-attention/)

[2] National, [https://ncfacanada.org/sec-launches-project-crypto-to-unleash-crypto-innovation/](https://ncfacanada.org/sec-launches-project-crypto-to-unleash-crypto-innovation/)

[4] AOL.com, [https://www.aol.com/finance/house-sends-stablecoin-bill-trumps-201658340.html](https://www.aol.com/finance/house-sends-stablecoin-bill-trumps-201658340.html)

[5] CLS Blue Sky Blog, [https://clsbluesky.law.columbia.edu/](https://clsbluesky.law.columbia.edu/)