Reserve assets

Reserve assets are the answer to the only question that ultimately matters about a stablecoin: if everyone asked for their money back this afternoon, what would they be paid with? The token’s promise is a fixed value on demand. The reserves are where that promise lives.

Composition, not size, is the interesting variable. A reserve equal to 100% of tokens outstanding sounds absolute, but 100% in what? Cash and overnight Treasury repurchase agreements can be turned into dollars in hours. Treasury bills a few weeks from maturity trade at par in any market weather. Longer bonds carry interest-rate risk, corporate paper carries credit risk, and anything less liquid carries the risk that a forced sale in a stressed market returns less than face value at the exact moment redemptions surge. The 2023 case in which USDC briefly traded below its peg, when part of its cash sat at a failing bank, made the point permanently: the depeg risk of a fully reserved token is concentrated in the composition and custody of its reserves.

Practice at the two largest issuers illustrates the spectrum. Circle keeps most USDC backing in an SEC-registered government money market fund managed by BlackRock, holding cash, short-dated Treasuries, and overnight repos, disclosed in monthly attestations by Deloitte. Tether publishes quarterly attestations by BDO; the Q1 2026 report showed $191.7 billion in total assets against $183.5 billion in liabilities, the majority in US Treasury exposure, alongside holdings such as gold and secured loans that a stricter regime would not permit.

Regulation has now made composition a matter of statute rather than issuer policy. The GENIUS Act limits a US payment stablecoin’s reserves to a short list of high-quality liquid assets and mandates monthly disclosure; MiCA imposes reserve and safeguarding rules on e-money token issuers in the EU. The direction of travel is uniform: the more a token claims to be money, the more its backing is required to look like the safest money there is.