Stablecoin Reserves: Assets, Liabilities and Disclosure

A fiat-backed stablecoin is easiest to judge as a balance sheet. Every token in circulation is a liability the issuer has promised to redeem at $1, the reserve is the pool of assets meant to pay those claims, and the difference is a cushion that absorbs losses. Reserve reports show those numbers at a single moment; they do not show that the assets will be reachable, or worth the same, on the day many holders want out.

Key takeaways

Circle's August 31, 2026 USDC report shows coverage of 1.0011 (cushion 0.11%); Tether's June 30, 2026 report shows 1.0224 (2.24%), with about a quarter of assets outside cash-like instruments. The two value token liabilities slightly differently.
The GENIUS Act requires at least 1:1 reserves from a short list of cash-like assets and a monthly examined reserve report. It takes effect no later than January 18, 2027.
If 8% of reserves become unreachable, as with Circle's Silicon Valley Bank deposits in March 2023, coverage of 1.0011 falls to about 0.92.

The balance sheet behind a token

When a verified customer sends $1 million, the issuer creates 1 million tokens (a liability) and invests the dollars (reserve assets); redemption reverses the entry. The token is a claim on the issuer, not a fund share, so holders gain nothing if the reserve earns more and are exposed if it loses value.

Coverage ratio      C = R / L
Cushion             K = R - L        (as a share of liabilities: K / L)
Stress coverage     C_stress = (1 - x) * C

R = fair value of reserve assets on the report date
L = tokens outstanding valued at the redemption price ($1 each)
x = share of reserves lost or temporarily inaccessible

Composition matters as much as coverage: a reserve at 1.02 with 10% of its assets in one bank is weaker against that bank's failure than a reserve at 1.001 in overnight Treasury repo and short bills, because x can be far larger than the cushion.

Not every design has this balance sheet. TerraUSD (UST), which collapsed in May 2022, was an "algorithmic stablecoin": according to the SEC's February 16, 2023 announcement of charges against Terraform Labs, it was meant to hold its peg by being interchangeable for another token, LUNA, not by redemption from a reserve. Both fell close to zero. There was no reserve to read.

What the GENIUS Act requires

The Guiding and Establishing National Innovation for U.S. Stablecoins Act (Public Law 119-27) was signed on July 18, 2025. Once in effect, it makes issuing a payment stablecoin in the US unlawful for anyone other than a "permitted payment stablecoin issuer" (section 3). Its reserve rules sit in section 4(a).

Which assets count as reserves

Reserves must be identifiable and back outstanding tokens "on an at least 1 to 1 basis", using only:

US currency or balances at a Federal Reserve Bank;
demand deposits at an insured depository institution, subject to limits the FDIC and NCUA may set;
Treasury bills, notes or bonds with 93 days or less to maturity, or issued with a maturity of 93 days or less;
overnight repo selling such bills, and overnight reverse repo backed by Treasuries and overcollateralized on market terms, if tri-party, centrally cleared, or with a counterparty judged creditworthy "even in the event of severe market stress";
shares of a registered government money market fund invested solely in the assets above;
other similarly liquid federal government assets a regulator approves, and tokenized forms of the non-repo assets.

Gold, bitcoin, corporate bonds, equities and secured loans are not on the list. Reserves may not be pledged or reused, except for repo margin, standard custody, or raising liquidity for expected redemptions through Treasury bill repo of up to 93 days that is centrally cleared or regulator-approved.

What must be disclosed, and how it is checked

Monthly composition report on the issuer's website: tokens outstanding, and the amount and composition of reserves, "including the average tenor and geographic location of custody" of each category.
Monthly examination of that report by a registered public accounting firm, plus a monthly CEO and CFO certification to the regulator; knowingly false certification is a crime.
Redemption policy: clear procedures for "timely redemption" and plain-language fees, changeable only on at least 7 days' notice. The Act sets no number of days for "timely", and only regulators, not the issuer, may impose discretionary limits on it.
Annual audited financial statements under US GAAP and PCAOB standards, published online, for issuers with more than $50 billion outstanding that are not already SEC reporting companies (section 4(a)(10)).

Section 20 makes the Act effective on the earlier of January 18, 2027 (18 months after enactment) or 120 days after the primary federal regulators issue final rules. As of October 11, 2026, the Federal Register showed only proposed rules from them, including the OCC's proposal of March 2, 2026, so details below the statute can still change.

The earlier state template is stricter on timing. New York DFS guidance of June 8, 2022, for DFS-regulated dollar stablecoin issuers, requires full backing at the end of each business day, segregated reserves, a monthly CPA examination covering month-end and at least one random business day, and by default redemption within two full business days (T+2) of a compliant order.

Two reserve reports, side by side

The figures below, recomputed from the two largest dollar stablecoin issuers' own documents, show how each report is built; they are not a ranking.

Item	USDC (Circle)	USDT (Tether International)
Report date	August 31, 2026 (also August 11)	June 30, 2026
Examining firm and standard	Deloitte & Touche LLP; AICPA attestation standards, examination	BDO Advisory Services S.r.l. (Milan); ISAE 3000 (Revised), reasonable assurance
Liabilities	73,320,757,305 USDC in circulation	$183,641,897,215 total liabilities, of which $183,622,105,630 tokens (all of the company's fiat-denominated tokens, not USDT alone)
How tokens are measured	Each USDC counted at $1	Contractual redemption value, which the report says reflects the 0.1% redemption fee
Assets	$73,398,532,613 reserve fair value	$187,751,426,411 total assets
Cushion	$77.8 million (0.11%)	$4.11 billion (2.24%)
Coverage ratio	1.0011	1.0224
What the opinion covers	Management's assertion that reserves are at least equal to USDC in circulation	The whole "Financial Figures and Reserves Report", excluding its notes

Because the bases differ, the cushions are not exactly comparable: adding the full 0.1% back to Tether's token liabilities would raise them by about $0.18 billion and leave a cushion of about $3.93 billion (2.14%).

USDC: repo, bills and bank cash

According to Circle's USDC reserve report and Deloitte's examination report dated September 29, 2026, 84.9% of the reserve sits in the Circle Reserve Fund, a government money market fund under SEC Rule 2a-7, and the rest in segregated bank accounts and Treasury bills. Looking through the fund, the August 31 reserve was:

overnight Treasury repo (cash lent overnight against Treasury collateral): $49.58 billion, 67.6%;
Treasury bills: $13.22 billion, 18.0%, averaging 39 days to maturity, the longest 73 days;
cash at regulated financial institutions: $9.59 billion, 13.1%;
cash inside the fund: $1.00 billion, 1.4%.

Read against the GENIUS list, as an illustration only since the Act is not yet in effect, each category is of a listed type, though the report does not show every condition, such as repo counterparty terms or whether each bank is insured. It lists every bill's maturity but not where assets are held in custody. Circle's transparency page says bank cash is held "mostly among a handful of the world's largest banks".

USDT: bills, repo and other assets

Tether's Financial Figures and Reserves Report as of June 30, 2026, with BDO's assurance report dated July 31, 2026, treats all assets of Tether International, S.A. de C.V., an El Salvador company, as reserves. It is a foreign issuer, not a US permitted issuer, so section 4(a) does not govern this report; the right-hand column is an illustrative reading only.

Asset category (June 30, 2026)	US$ billions	Share of assets	Type on the GENIUS list? (illustrative)
US Treasury bills	114.96	61.2%	Yes, if each bill is within 93 days (report gives a weighted average under 90 days)
Overnight reverse repo	18.63	9.9%	Yes as a type; the Act also requires overcollateralization, and the report shows $18.60 billion of collateral against $18.63 billion lent, a gap it attributes to intraday moves
Term reverse repo	6.99	3.7%	No; the Act lists overnight repo only
Precious metals (gold)	18.84	10.0%	No
Secured loans	13.45	7.2%	No
Bitcoin	5.80	3.1%	No
Other investments	5.24	2.8%	No
Public equities	3.76	2.0%	No
Cash and bank deposits, non-US T-bills, corporate bonds	0.07	under 0.1%	Cash only if at an insured institution; the others no
Total	187.75	100%

On this reading, categories of a listed type (US bills, overnight reverse repo and cash) total at most $133.63 billion, or 72.8% of liabilities. Gold and bitcoin are valued at June 30 Bloomberg closes ($4,008.02 per ounce and $58,642.15), so those figures move with markets.

Attestation is not an audit

Both reports carry "reasonable assurance" opinions, the higher of the two assurance levels in attestation work, but what is assured is narrow. Deloitte examined one assertion: that reserve fair value was at least equal to USDC in circulation at 11:59 pm UTC on two dates. BDO's report is "limited to a point in time" and gives no assurance on the notes, the going-concern assessment, or activity before or after June 30. Tether's report says it "does not represent the financial statements of the Company".

A financial statement audit asks a broader question. Circle, an SEC-registered company, publishes audited financial statements in its 2025 Form 10-K: Deloitte audited three years of operations and cash flows under PCAOB standards, including tests of stablecoins outstanding on public blockchains.

Question	Monthly reserve examination	Annual financial statement audit
Time covered	One or two instants	A full fiscal year plus the year-end balance sheet
Scope	Tokens outstanding and reserve assets	All assets, liabilities, income, cash flows and disclosures
Window dressing between dates	Not tested	Activity across the year is in scope
GENIUS Act requirement	Every permitted issuer, monthly	Above $50 billion, if not already an SEC reporting company

The AICPA's 2025 Criteria for Stablecoin Reporting standardize how tokens and backing assets are presented at a point in time; a second part covers controls over issuance, redemption and custody across a period, as the Journal of Accountancy reported on January 12, 2026.

Stress-testing the cushion

A frozen deposit

On the evening of March 10, 2023, Circle said it could not withdraw $3.3 billion of USDC reserves, around 8% of the total, from Silicon Valley Bank, according to a Federal Reserve Board FEDS Note of December 17, 2025. With redemptions halted over the weekend, USDC traded as low as 86 cents. It recovered after the Treasury, Federal Reserve and FDIC said on Sunday, March 12 that all SVB depositors would be protected, and fully once Circle resumed redemptions on Monday.

Illustrative example. Apply the same 8% to the August 2026 USDC figures: C_stress = (1 − 0.08) × 1.0011 = 0.921, a gap of about $5.8 billion, and the 0.11% cushion is less than a seventieth of that loss. If all $9.59 billion of bank cash were frozen, coverage would be 0.870. The same test on Tether's largest non-Treasury category, gold at 10.0% of assets, gives (1 − 0.100) × 1.0224 = 0.920. The Act directs regulators to set diversification standards, including deposit concentration at banks.

Market prices

Illustrative sensitivity, not a forecast. Tether's gold, bitcoin and public equities total $28.40 billion; a combined 14.5% fall would erase the $4.11 billion cushion, all else unchanged. Short bills barely move by comparison: a one-point rise in yields lowers a 45-day bill's price by about 0.12%, and a 90-day bill's by about 0.25%.

A redemption run

Hypothetical issuer, round numbers. Tokens of $10.00 billion are backed by $10.05 billion: $1.0 billion of bank deposits, $3.0 billion of overnight reverse repo, $2.0 billion of government money market fund shares and $4.05 billion of Treasury bills averaging 45 days.

Step	Redemptions	Paid from	Tokens left	Reserves left	Coverage
Start	-	-	$10.00B	$10.05B	1.005
Day 1	$3.0B (30%)	Deposits $1.0B, maturing repo $2.0B	$7.00B	$7.05B	1.007
Day 2	$2.0B (20%)	Remaining repo $1.0B, fund shares $1.0B	$5.00B	$5.05B	1.010
Day 3	$3.0B (30%)	Fund shares $1.0B, bills sold $2.0B after a 1-point yield rise (loss about $2.5M)	$2.00B	$2.05B	1.024

With intact, short-dated assets, 80% of the tokens are redeemed at par and coverage for those who remain rises, because the cushion, about $47.5 million after the sale loss, spreads over fewer tokens. Reverse the order and the result flips. If the $1.0 billion deposit is frozen first, coverage falls to 0.905; if half the tokens are then redeemed at $1, the remaining $5.0 billion is backed by $4.05 billion, or 0.81. Paying early redeemers at par moves the whole loss onto those who wait: the first-mover incentive behind a run.

Redemption: who, how much, how fast

The 1:1 promise runs to those who can redeem directly. Circle's USDC Terms (last updated December 12, 2025) say only Circle Mint account holders can redeem with Circle, at $1 per USDC "less fees where applicable". Tether's fee page (checked October 11, 2026) sets a minimum redemption of $100,000, a fee of "the greater of $1,000 or 0.1%" and a $150 verification fee, and says Tether has sole discretion to approve accounts.

USDT redeemed	Redemption fee	Fee as % of amount
$100,000	$1,000	1.00%
$250,000	$1,000	0.40%
$1,000,000	$1,000	0.10%
$5,000,000	$5,000	0.10%

Everyone else exits by selling on an exchange, where the price depends on arbitrage: a verified redeemer who buys a token for p and redeems it for $1 minus a fee f profits when p is below 1 − f, and that buying pulls the price back up. For redemptions of $1 million or more, where the fee is 0.1%, the bound is about $0.999 before transfer costs and delays; at the $100,000 minimum the fee is 1%, so the bound is about $0.99. The anchor holds only while redemptions are open, which they were not over the March 2023 weekend.

The reserve's earnings go to the issuer: Circle's terms say holders are not entitled to interest on reserves. Its 10-K reports $2.64 billion of 2025 reserve income, 96.0% of total revenue, and $1.66 billion of distribution and transaction costs, including payments to Coinbase.

Frequently asked questions

Is a stablecoin covered by FDIC deposit insurance?

No. Section 4(e) of the GENIUS Act states that payment stablecoins are not subject to FDIC deposit insurance or NCUA share insurance, nor backed by the full faith and credit of the United States, and makes claiming otherwise unlawful.

Why doesn't the token count in a reserve report match the supply on a blockchain explorer?

Issuers subtract on-chain tokens that are not owed to anyone. Circle's August 31 figure starts from 75.07 billion USDC and removes 1.61 billion "allowed but not issued", 129.9 million access-denied (frozen) tokens and a few pending burns, leaving 73.32 billion. Tether excludes tokens in its treasury wallet and tokens it holds itself.

Can a stablecoin issuer share reserve interest with holders?

Not directly. Section 4(a)(11) bars permitted and foreign issuers from paying holders any interest or yield solely for holding, using or retaining the token. The text addresses issuers; Circle's 10-K shows it shares reserve income with distribution partners, whose customer programs run on their own terms.

What happens to holders if a permitted issuer goes bankrupt?

Section 11 gives holders ratable priority over all other creditors on the required reserves and keeps those reserves out of the bankruptcy estate; a court is to use best efforts to start distributions within 14 days of the required hearing. Any shortfall against required reserves ranks first against the rest of the estate.

Do the GENIUS reserve rules apply to stablecoins issued outside the US?

Not directly. From July 18, 2028, digital asset service providers may not offer or sell a payment stablecoin to a person in the US unless a permitted issuer issued it, with exceptions. Under section 18, a foreign issuer qualifies if Treasury finds its home regime comparable, it registers with the OCC, it holds enough reserves at a US institution for US customers' liquidity needs (unless a reciprocal arrangement says otherwise), and its home country is not under comprehensive US sanctions or a primary money laundering concern.

A checklist for any reserve report

Note the report date and the opinion date; a report weeks old describes a past balance sheet.
Divide reserves by tokens, express the cushion in dollars and percent, and check how tokens are valued.
Check what the accountant opined on (one assertion, a full report, or audited statements) and which sections carry no assurance.
Sort assets into the GENIUS categories: 93-day maturities, overnight versus term repo, collateral, fund look-through.
Take the largest single exposure and apply C_stress = (1 − x) × C.
Read the redemption terms: who may redeem, the minimum, the fee and the timing. Below the minimum, the exit is a market sale.
Note the regulator, the examining firm, and whether the issuer is US-permitted, foreign, or neither.