How stablecoins are backed: reserves, attestations and audits

U.S. and European rules have tightened what counts as a stablecoin reserve and how issuers must verify holdings. The GENIUS Act, signed July 18, 2025, requires monthly reserve composition disclosures reviewed by a registered public accounting firm and mandates annual GAAP audits for issuers with more than $50 billion outstanding. The EU’s Markets in Crypto-Assets framework requires significant tokens to hold 30% to 60% of reserves as deposits with EU credit institutions. Regulators pointed to a market size above $300 billion by mid-2026 and to the largest issuers holding more U.S. Treasuries than many sovereign nations.

A stablecoin is backed when an issuer holds assets equal to tokens in circulation and token holders have a legal right to redeem for that value. Determining backing requires knowing which assets sit in reserves, where they are custodied, how often reserves are verified and what legal claims token holders have if an issuer fails. Regulators and market participants now treat those elements as part of financial infrastructure.

The market uses several backing models. Most tokens are fiat-backed and hold cash, short-term Treasury bills, overnight repurchase agreements and government money-market fund shares at banks and custodians. Crypto-collateralized coins lock crypto assets in smart contracts and make collateral visible on-chain, while carrying smart-contract and asset-volatility risk. Commodity-backed tokens tie value to physical assets such as gold held in vaults and verified with attestations and serial-number data. Algorithmic or synthetic models rely on supply mechanisms or derivatives hedging instead of full, liquid reserves; uncollateralized algorithmic designs are excluded from the U.S. payment stablecoin framework under current law.

Reserve composition differs by issuer. Tether’s Q4 2025 attestation reported about $193 billion in total reserve assets, including an estimated $141 billion of direct and indirect U.S. Treasury exposure against roughly $186 billion USDT in circulation, with about 82% of reserves in Treasury-related instruments and the remainder in assets such as gold, Bitcoin and secured loans. Circle reported about $80 billion in USDC reserves in Q1 2026, with roughly 80% held in the Circle Reserve Fund (USDXX), an SEC-registered government money market fund managed by BlackRock and custodied at BNY Mellon; the remainder sits as cash at major global banks. Circle provides monthly attestations signed by Deloitte. Tether began a full audit engagement with KPMG in Q1 2026 after years of quarterly attestations.

Verification relies on three overlapping tools. Attestations are point-in-time confirmations that reserve balances matched an issuer’s records on a specific date. Full audits under GAAP review internal controls, custody arrangements and the complete financial statements and produce a formal audit opinion. Proof-of-reserves feeds and on-chain checks can show that certain assets exist or the number of tokens on-chain, but they cannot reveal whether reserves are encumbered or pledged to other parties.

The GENIUS Act restricts permitted reserve assets to U.S. currency, demand deposits, Treasury bills with no more than 93 days to maturity, overnight repo and government money-market fund shares, and requires reserves to be held in segregated, bankruptcy-remote accounts with priority claims for token holders. The Office of the Comptroller of the Currency published a proposed rulebook in March 2026 that includes a maximum two-business-day redemption standard. Under MiCA, tokens that do not meet deposit requirements have been removed from EU retail offerings while MiCA-compliant coins remain available.

Users and treasury teams commonly verify backing by reading an issuer’s latest reserve report, noting how often attestations are issued, checking the quality of reserve assets and custodial arrangements, and comparing attested circulation with on-chain supply data. Regulators have made many of these checks mandatory for large issuers and market practices have shifted toward higher-frequency disclosures and formal audits.