Stablecoins 103: The Accounting, Operational, and Tax Challenges of Using Stablecoins

In Stablecoins 101, we explored what stablecoins are and why they’ve gained mainstream attention. In Stablecoins 102, we broke down how corporate treasurers and businesses are leveraging stablecoins for payments, treasury management, and settlements.

Now, in Stablecoins 103, we’ll dive into the real-world challenges businesses face when integrating stablecoins - from accounting complexities to tax compliance and operational hurdles.

Why Managing Stablecoins Is More Complex Than It Seems

At first glance, stablecoins seem straightforward: they maintain a 1:1 peg to fiat currency and offer fast, low-cost transactions. But when businesses start integrating stablecoins into their financial operations, they quickly realize significant challenges arise in areas like:

Regulatory Compliance – How do global tax laws apply to stablecoin holdings?

• Operations – How can companies set up the infrastructure to support stable coins? 

• Accounting – How should stablecoins be classified on the balance sheet?

• Taxation – Are stablecoin transactions taxable? What happens if they depeg?

Operational Challenges: Building the Infrastructure for Stablecoin Transactions

While stablecoins offer advantages in speed, cost, and accessibility, integrating them into a business’s financial operations isn’t as simple as flipping a switch. Companies need to establish the right infrastructure to support stablecoin transactions while ensuring security, compliance, and efficiency.

Integration with Banking & ERP Systems – Stablecoins don’t integrate natively with traditional banking infrastructure or enterprise financial systems like SAP or NetSuite. Businesses must build custom integrations or use middleware to, reconcile stablecoin transactions with bank transactions, track inflows and outflows in accounting and ERP systems, and automate stablecoin invoicing and settlements.

Custody & Wallet Management – Unlike traditional bank accounts, stablecoin transactions occur on public blockchains, requiring businesses to manage digital wallets for sending, receiving, and storing funds. Companies must decide whether to use self-custody solutions (e.g. multi-sig setups) for full control but higher operational complexity or custodial solutions (e.g., BitGo, Anchorage, Coinbase Prime, Fireblocks) that offer security and regulatory compliance but require trusting a third party.

Transaction Speed & Network Congestion – While stablecoins enable near-instant transactions, network congestion can slow down processing times and increase gas fees, particularly on blockchains like Ethereum. Businesses will need to use multiple blockchain networks to reduce dependency on any single infrastructure, as well as regularly monitor transaction costs and execution times.

Accounting Challenges: How Do You Classify Stablecoins?

One of the biggest questions for businesses using stablecoins is how to account for them in financial reporting. Unlike traditional bank deposits, stablecoins are digital assets, but not all stablecoins are treated the same way.

Cash & Cash Equivalents – If a stablecoin is highly liquid, fully backed by fiat, and redeemable 1:1 (e.g., USDC, PayPal USD), it may be considered by some as a cash equivalent.

Digital Assets (Intangible Asset Treatment) – Some stablecoins, particularly algorithmic or crypto-backed stablecoins (e.g., DAI, LUSD), may be treated as digital assets subject to impairment rules.Financial Instruments – Depending on the jurisdiction, stablecoins could be classified as financial instruments if they are used in structured products or lending activities.

Tax Challenges: Are Stablecoin Transactions Taxable?

Stablecoins are designed to maintain a fixed value, but that doesn’t necessarily mean they are tax-free.

Capital Gains Tax – If a business buys a stablecoin at $1.00 and later redeems it at $0.98 or $1.02, it may trigger a taxable event based on the gain or loss.

Income Tax on Yield – If a company earns yield on stablecoin deposits (e.g. through lending protocols), those earnings are taxable.

Tax Reporting for Payments – Using stablecoins for payroll or vendor payments may trigger reporting obligations (e.g., 1099-DA or VAT/GST rules in certain jurisdictions).

Depegging Events – If a stablecoin loses its peg, the difference between acquisition and sale price may create unexpected tax implications.

Regulatory Compliance: How Governments Are Treating Stablecoins

Stablecoins are under increasing scrutiny from regulators worldwide, with governments implementing new compliance requirements for issuers and users.

U.S. Regulations – The SEC and Treasury are evaluating whether stablecoins should be treated as securities or require reserve audits to ensure full backing, with legislation like the GENIUS act.

EU’s MiCA Framework – The Markets in Crypto-Assets (MiCA) regulation requires stablecoin issuers to be licensed and maintain reserve transparency.

CARF & DAC8 – New tax frameworks mandate stablecoin transaction reporting to prevent tax evasion.

AML & KYC Requirements – Many jurisdictions now require businesses to track who they send stablecoins to and report large transactions.

The GENIUS Act

The Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act) is a proposed bipartisan legislation aimed at creating a comprehensive regulatory framework for payment stablecoins in the United States. Key provisions include:

1. Definition of Payment Stablecoins – The Act defines a payment stablecoin as a digital asset designed to maintain a stable value relative to a fixed amount of monetary value and intended for use as a means of payment or settlement.

1. Permitted Issuers – Entities eligible to issue payment stablecoins include:​
   • Federal qualified nonbank payment stablecoin issuers approved by the Office of the Comptroller of the Currency (OCC).
   • Subsidiaries of insured depository institutions approved by their primary federal regulator.
   • State-qualified payment stablecoin issuers approved by state regulators.

1. Reserve Requirements: Issuers must maintain reserves backing their stablecoins on at least a 1:1 basis. Acceptable reserves include U.S. currency, deposits with Federal Reserve Banks, demand deposits at insured depository institutions, and short-term Treasury securities. 

1. Public Disclosure: Issuers are required to provide monthly disclosures of their reserve compositions, including the total number of outstanding stablecoins and the amount and composition of the reserves. These disclosures must be examined by a registered public accounting firm, and the CEO and CFO must certify their accuracy.​

1. Anti-Money Laundering (AML) Compliance: Stablecoin issuers are classified as financial institutions under the Bank Secrecy Act, subjecting them to AML compliance obligations, including customer identification and due diligence.​Mayer Brown

1. Bankruptcy Provisions: The Act amends the Bankruptcy Code to permit non-depository institution stablecoin issuers to be debtors, allowing them to declare bankruptcy. It also prioritizes the claims of stablecoin holders over other creditors in the event of insolvency.​

Legislative Progress:

As of March 13, 2025, the Senate Banking Committee approved the GENIUS Act with an 18-6 vote, including support from five Democrats. The bill now advances to the full Senate for debate.

Implications for Businesses:

If enacted, the GENIUS Act would establish clear guidelines for the issuance and management of payment stablecoins, impacting entities involved in stablecoin issuance, custody, and transactions. Businesses utilizing stablecoins would need to ensure compliance with the new regulatory standards to mitigate legal and financial risks.​

The GENIUS Act represents a significant step toward regulatory clarity in the stablecoin sector, aiming to balance innovation with consumer protection and financial stability.

Final Thoughts: Are Stablecoins a Smart Choice for Your Business?

Stablecoins offer speed, efficiency, and cost savings for businesses, but they also introduce new tax, accounting, and compliance complexities.

1. Regulations are evolving: Expect clearer frameworks from the U.S., EU, and global regulators.

1. Stablecoins are becoming mainstream: Major companies are integrating them into payments & commerce.

1. Crypto-native businesses rely on them: Web3 projects use stablecoins for liquidity, payments, and governance.

1. Fiat-backed stablecoins dominate: USDT and USDC are currently the most widely used.

1. Algorithmic stablecoins carry risk: History has shown failures like Terra’s UST collapse.

The key takeaway? With increasing institutional adoption and regulatory focus, companies need robust tax and accounting solutions for stablecoins. Taxbit’s automation and compliance tools simplify operations, ensuring seamless reporting for enterprises, web3 businesses, and financial institutions.

Need Help Managing Stablecoin Accounting & Compliance?

Taxbit automates stablecoin reconciliation, tax compliance, and audit reporting. Talk to our experts today.