A stablecoin is a digital token that is designed to hold a fixed value, usually one U.S. dollar, and can be transferred on public blockchains around the clock. Its value is maintained (or backed) by reserves the issuer holds, mainly cash, short-term U.S. Treasury bills and repurchase agreements, and the backing ratio is calculated by dividing total reserve assets by the value of tokens outstanding. As of June 30, 2026, Tether reported $187.75 billion of assets against $183.64 billion of liabilities for about $184.6 billion of USDT in circulation, a ratio of 102.2% [1], and Circle reported $73.3 billion of USDC in circulation, up 19% from a year earlier [2]. Together the two largest stablecoins totaled about $258 billion, and Tether's stated market share of over 60% implies a total stablecoin market of roughly $300 billion [1][2].
What is a stablecoin and how does it hold its value?
A dollar stablecoin works like a digital bearer version of a money market fund share that always trades at $1.00. The issuer sells tokens for dollars, invests the dollars in safe short-term assets, and promises to redeem tokens at par. Because the token can be sent anywhere a blockchain reaches in minutes, it is used for trading crypto assets, moving money across borders and settling payments. There are three broad designs:
- Fiat-backed: reserves are held in dollars, Treasury bills, repo and bank deposits. USDT and USDC are the main examples [1][2].
- Crypto-collateralized: tokens are backed by other crypto assets locked in smart contracts, usually with more collateral than tokens issued.
- Algorithmic: supply expands and contracts by code with little or no hard collateral. Several of these have failed, which is why regulators now focus on fully reserved designs.
The backing ratio is the key number. It equals reserve assets divided by tokens outstanding. A ratio above 100% means the issuer holds more than it owes; Tether's $4.11 billion of excess reserves on June 30, 2026 equals about 2.2% of its liabilities [1].
How are stablecoins backed? Tether and Circle in 2026
Tether's second quarter 2026 attestation, published July 31, 2026 and examined by BDO, reported total assets of $187,751,426,411 against total liabilities of $183,641,897,215 as of June 30, 2026, leaving excess reserves of $4,109,529,196 [1]. The company said the majority of reserves were in U.S. Treasury bills and repo, that its gold holdings exceeded 146 tons after adding 14 tons in the quarter, that secured lending exposure was cut by about $2.38 billion, and that net operating profit was about $1.50 billion for the quarter, led by income on Treasuries and repo [1]. USDT issuance rose to about $184.6 billion, and Tether put its share of the total stablecoin market at over 60% [1].
Circle, the issuer of USDC, reported second quarter 2026 results on August 5, 2026: USDC in circulation of $73.3 billion at June 30, up 19% year over year, total revenue and reserve income of $701 million, reserve income of $668 million, and net income of $48 million [2]. Circle also received final approval from the Office of the Comptroller of the Currency to establish Circle National Trust, a national trust bank, making it one of the first stablecoin issuers with a federal bank charter [2]. USDC reserves are held mainly in a government money market fund managed by BlackRock plus cash at banks, and the company publishes monthly attestations [2].
Reserve models compared
| Item (as of June 30, 2026) | Tether (USDT) | Circle (USDC) |
|---|---|---|
| Tokens in circulation | About $184.6 billion [1] | $73.3 billion [2] |
| Total reserve assets | $187.75 billion [1] | Exceeds circulation per monthly attestation [2] |
| Main reserve assets | Treasury bills, repo; also gold, Bitcoin, secured loans [1] | Short-dated Treasuries, repo and cash via a government money market fund [2] |
| Quarterly income | About $1.50 billion net operating profit [1] | $668 million reserve income [2] |
| Assurance | Quarterly attestation by BDO [1] | Monthly attestation; OCC-approved national trust bank [2] |
The economics are simple: issuers earn the yield on Treasury bills, which paid 3.89% for 3 months and 4.00% for 6 months on August 10, 2026, and pay token holders nothing [6]. That interest income is what funds the business and what makes reserve quality the central question for holders.
What the GENIUS Act requires of stablecoin issuers
The Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, became Public Law 119-27 on July 18, 2025 [3]. It requires permitted issuers to maintain identifiable reserves backing outstanding payment stablecoins on at least a 1 to 1 basis, and it restricts those reserves to U.S. coins and currency, balances at Federal Reserve banks, demand deposits at insured depository institutions, Treasury bills with 93 days or less to maturity, overnight repurchase and reverse repurchase agreements backed by Treasuries, registered government money market funds and similar liquid assets, including tokenized versions of them [3]. Issuers must publish the monthly composition of their reserves on their website, including the total tokens outstanding and the tenor and custodian of each reserve category [3]. Federal agencies spent 2026 writing the implementing rules; the Treasury Department issued a notice of proposed rulemaking on section 3 of the Act on August 17, 2026 [4].
From a market-oriented view, the law codifies what the two large issuers already do while pushing out riskier designs. It also ties stablecoins to the Treasury market: every dollar of compliant stablecoin is a dollar of demand for bills, repo or bank deposits, which helps fund the federal deficit at the short end. The counterpoint is concentration risk, since a run on a large issuer would force rapid sales of bills and could strain repo markets.
How investors use stablecoins
- Cash position inside crypto markets: traders park proceeds in USDT or USDC between trades instead of wiring dollars out of an exchange. Prices for Bitcoin, Ethereum and other assets are tracked on DataPorium's crypto page [5].
- Settlement and transfers: stablecoins move value in minutes across borders at low cost, which is why payment companies and banks have been building on them.
- Yield strategies: lending stablecoins on regulated platforms or in decentralized protocols earns interest, but it converts a reserve-backed token into an unsecured loan to the borrower or protocol.
- Equity exposure to the sector: Circle is a listed company whose revenue is mostly reserve income, so its results move with short-term rates and USDC supply [2].
Investors may consider the practical risks: stablecoins pay no interest to holders, they depend on the issuer's solvency and redemption process, and their value in a stress event depends on reserve quality and access to banking. Tokens backed by short Treasury bills and audited monthly carry far less risk than those backed by loans, crypto assets or algorithms. Reading the reserve report before holding a large balance is the equivalent of reading a money market fund's holdings.
Stablecoins are dollar tokens backed by reserves of cash, Treasury bills and repo, and as of June 30, 2026 Tether's USDT ($184.6 billion) and Circle's USDC ($73.3 billion) accounted for about $258 billion of a market near $300 billion.
Key takeaways
- A stablecoin is a blockchain token pegged to $1 and backed by reserves; the backing ratio is reserves divided by tokens outstanding.
- Tether held $187.75 billion of assets against $183.64 billion of liabilities on June 30, 2026, a 102.2% ratio, with $184.6 billion of USDT outstanding [1].
- USDC circulation was $73.3 billion on June 30, 2026, up 19%, and Circle earned $668 million of reserve income in the quarter [2].
- The GENIUS Act (Public Law 119-27) requires 1 to 1 reserves in cash, short Treasury bills, repo and government money market funds, with monthly public disclosure [3].
- Holders earn no interest; the issuer keeps the Treasury yield, so reserve quality and redemption terms are what matter.
Frequently asked questions
What is a stablecoin in simple terms?
It is a digital token that is meant to always be worth one dollar and can be sent over a blockchain like an email. The issuer keeps dollars, Treasury bills and similar assets in reserve so it can buy the token back at $1 [3].
How are stablecoins backed?
The large dollar stablecoins are backed by reserves of cash, short-term U.S. Treasury bills, repurchase agreements and government money market funds. Tether reported $187.75 billion of assets for $183.64 billion of liabilities as of June 30, 2026, and the GENIUS Act requires at least 1 to 1 backing with these asset types [1][3].
How big is the stablecoin market in 2026?
USDT stood at about $184.6 billion and USDC at $73.3 billion as of June 30, 2026, together about $258 billion; Tether's stated share of over 60% puts the whole market near $300 billion [1][2].
Do stablecoins pay interest?
Not to holders. The issuer earns the yield on the reserve assets; Circle reported $668 million of reserve income in the second quarter of 2026. Any interest a holder earns comes from lending the tokens to someone else, which adds credit risk [2].
Sources & References
- [1] Tether, Q2 2026 attestation and performance release (July 31, 2026)
- [2] Circle, Circle Reports Second Quarter 2026 Results (August 5, 2026)
- [3] GovInfo, Public Law 119-27, GENIUS Act (July 18, 2025)
- [4] U.S. Department of the Treasury, Treasury Seeks Public Comment on GENIUS Act Proposed Rulemaking (August 17, 2026)
- [5] DataPorium Crypto Markets
- [6] U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, August 2026
