In this article
A stablecoin is a digital token that is meant to always be worth one US dollar. People use stablecoins to move money quickly, to trade crypto, and in some countries to save in dollars. Today they are worth more than $250 billion in total.
But a token cannot hold its value by itself. Something has to stand behind it. The company that issues the token promises to keep enough real assets, called reserves, to pay back every holder one dollar for each token. This guide explains what those reserves are, how to check them, and what can go wrong.
Key facts
- $183.6 billion: the amount of Tether’s USDT in circulation on 30 June 2026, the largest stablecoin.
- $4.11 billion: how much Tether says its assets exceeded what it owed holders on that date.
- About 80 percent: the share of Circle’s USDC reserves held in short-term US government debt, with the rest mostly as cash in banks.
- July 2025: the month the US GENIUS Act became law, setting rules for what stablecoin issuers must hold and publish.
How a dollar stablecoin works, in one minute
- You send $100 to the issuer, such as Tether or Circle.
- The issuer creates 100 tokens and gives them to you.
- The issuer invests your $100, mostly in very safe, short-term US government debt.
- When you want your money back, you return the tokens and the issuer pays you $100. The tokens are destroyed.
The issuer makes its money from step 3. The interest on those government debts goes to the company, not to the token holders. That is why stablecoin issuers can be very profitable when interest rates are high.
What “reserves” usually means
| Asset | What it is, in plain words | How safe and easy to sell |
|---|---|---|
| US Treasury bills | Short-term loans to the US government, usually repaid within a year | Very safe, sold easily |
| Reverse repos | Short loans to banks or dealers, with government bonds held as security | Very safe if the security is good |
| Cash in banks | Ordinary bank deposits | Safe, but bank deposits above insured limits can be at risk if a bank fails |
| Money market funds | Funds that hold short-term government debt | Very safe if the fund holds only government debt |
| Gold, bitcoin, loans | Riskier assets some issuers hold in smaller amounts | Prices can swing, and loans may not be repaid quickly |
What the two biggest stablecoins report
Tether (USDT)
Tether publishes a report every three months, checked by the accounting firm BDO. Its report for 30 June 2026 showed total assets of about $187.8 billion against about $183.6 billion of tokens in circulation. That leaves a buffer of about $4.11 billion. Most of the assets are US Treasury bills and short loans backed by government bonds. Tether also holds some riskier assets, including more than 146 tonnes of gold, bitcoin and secured loans, which is why critics watch its reports closely.
Circle (USDC)
Circle publishes a report every month on its transparency page, checked by the accounting firm Deloitte. Most of its reserves sit in a government money market fund managed by BlackRock, which holds short-term Treasury bills and repos. The rest is cash at large banks, used to pay people who redeem their tokens. Circle does not hold gold, bitcoin or loans in its reserves.
Attestation or audit? The difference matters
Most stablecoin reports are attestations, not full audits. An attestation is an accountant checking one claim on one day: “On 30 June, the reserves were at least equal to the tokens.” An audit is much broader. It looks at the whole company over a full year, including its debts, its controls and the risk that a bank or partner fails. As one comparison of the two puts it, an attestation shows the money was there on a given date; an audit shows whether the company is sound over time.
| Attestation | Full audit | |
|---|---|---|
| Covers | One date | A full year |
| Checks | Reserves were at least equal to tokens | All accounts, debts and internal controls |
| Looks at risks such as a bank failing | No | Yes |
| How often stablecoins publish one | Monthly or quarterly | Rarely, so far |
When stablecoins broke
- TerraUSD (May 2022). UST was not backed by cash or bonds. It relied on a trading formula with another token. When confidence fell, both tokens collapsed within days and holders lost tens of billions of dollars.
- USDC (March 2023). Circle had about $3.3 billion of its reserves at Silicon Valley Bank when the bank failed. USDC briefly fell to about 87 cents before the US government guaranteed the bank’s deposits. The reserves were real; the problem was where they were kept.
The new rules
In the United States, the GENIUS Act, signed on 18 July 2025, sets rules for “payment stablecoins”. According to a summary by the law firm Latham & Watkins, issuers must hold reserves only in cash, insured bank deposits, short-term Treasuries, Treasury-backed repos and similar money market funds. They must publish their reserves every month, have the reports examined by a registered accounting firm, and have their chief executive and finance chief certify them. Issuers with more than $50 billion in tokens must also publish yearly audited accounts. They may not pay interest to holders, and if an issuer goes bust, token holders are paid first.
The European Union has had its own rules for stablecoins, under a law called MiCA, since June 2024.
A five-point check before you trust a stablecoin
- Is it backed by real assets? Avoid coins that rely only on a formula or another token.
- How recent is the report? Monthly is better than quarterly.
- Who checked it? Look for a known accounting firm, and note whether it is an attestation or an audit.
- What is in the reserves? More Treasury bills and cash is safer; more loans, gold or crypto is riskier.
- Can you redeem? Check who can swap tokens for dollars directly, the minimum amount and the fees.
Important: This article explains how stablecoins work. It is not financial advice. Crypto assets can lose value, and a stablecoin is not a bank deposit.
Frequently asked questions
Is a stablecoin the same as money in a bank?
No. In most countries a stablecoin is not covered by deposit insurance. Its safety depends on the issuer’s reserves and on the rules it follows.
Do stablecoin holders earn interest?
Not from the issuer. Under the US GENIUS Act, issuers may not pay interest to holders. Some exchanges offer rewards, but those carry their own risks.
Can a fully backed stablecoin still lose its peg?
Yes, briefly, if people fear the reserves cannot be reached in time, as USDC showed in March 2023. Strong, transparent reserves make such breaks shorter and rarer.
For more on how money markets work, read what interest rate decisions mean for your household and when central banks step in to move currencies, or browse the Crypto section.
