SEC Says Some Stablecoins Can Be Treated as Cash, but Experts Warn of Innovation Risk

The U.S. Securities and Exchange Commission (SEC) issued guidance earlier this week stating that stablecoins may be classified as cash equivalents under accounting standards, Bloomberg reported. However, some experts warn the move could unintentionally stifle innovation.

According to the report from Bloomberg, the SEC’s updated staff guidance suggests that stablecoins backed by U.S. dollars and offering guaranteed redemption — meaning they can be redeemed 1:1 for USD — could be treated as “cash equivalents,” placing them in the same category as dollars or short-term Treasury bills on a company’s balance sheet.

That means companies could treat certain stablecoins, likely including Circle’s USDC, more like money, which could make it easier to use them in regular business. Moreover, the update could help pave the way for more traditional financial (TradFi) institutions to work with stablecoins, especially in areas like settlements and cross-border transactions.

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