Why it matters
A fiat-referenced stablecoin is a promise to pay one unit of currency. Whether that promise holds depends on what sits behind it and who has verified it. Reserve attestation is the disclosure mechanism the market has settled on, and the most consequential piece of information about a stablecoin.
It is also routinely misread. An attestation is not an audit. In an attestation engagement, an accounting firm reports on management's assertion, typically that the fair value of reserve assets at a specified moment was at least equal to tokens outstanding. It does not opine on the issuer's financial statements, on internal controls, or on whether reserve composition was stable between reporting dates.
How it works
The engagement has three components: management's assertion, the point in time to which it applies, and the standard under which the accountant tests it. Circle's report on USDC, dated 29 April 2026, examines the assertion that the fair value of assets in the USDC reserve is equal to or greater than USDC in circulation, in accordance with attestation standards established by the American Institute of Certified Public Accountants. It covers two instants (11 March and 31 March 2026, each at 11:59pm UTC) rather than a period.
At 31 March 2026 Circle reported USDC in circulation of $77.05bn against reserves with a fair value of $77.13bn, composed of $24.91bn of US Treasury securities, $40.76bn of Treasury repurchase agreements and $10.36bn of cash at regulated financial institutions.
Tether publishes a quarterly attestation prepared with BDO. As of 31 March 2026 it reported total assets of $191.77bn against liabilities of $183.54bn, an excess of $8.23bn, with roughly $141bn of direct and indirect US Treasury exposure, approximately $20bn of physical gold and approximately $7bn of bitcoin. Gold and bitcoin are marked at market and are not par-value instruments, so the buffer absorbing their price risk is the disclosed excess rather than the redemption promise.
Economic mechanism
Attestation is an information device that addresses a specific market failure. A holder cannot observe the reserve, cannot enforce redemption individually in most cases, and faces a first-mover advantage if others can redeem before assets are liquidated, which is the classic structure of a run. Periodic third-party verification reduces the variance of beliefs about backing, which raises the threshold of bad news required to trigger redemptions.
What attestation cannot do is convert a maturity- and credit-transformed portfolio into a par claim. The IMF's 2025 paper Understanding Stablecoins notes that major issuers do not guarantee redemption rights for all holders and that reliance on secondary markets creates first-mover advantages during a loss of confidence. It records that in March 2023 USDC traded 12% below parity after the failure of Silicon Valley Bank, where Circle held $3.3bn of deposits, while about 99% of intraday deviations from target have been within 1%. Attestation supports the peg in normal conditions and is silent about the tail.
Reserve composition also determines who receives the carry. A portfolio of Treasury bills and overnight repo passes rate risk to the issuer's income statement while leaving holders a non-interest-bearing claim, which is why issuer profitability rather than holder return is the observable output.
Participants
Issuers make the assertion. Registered accounting firms perform the examination. Custodians and reserve managers hold the assets. Regulators set the cadence and minimum content of disclosure. Under the US framework enacted on 18 July 2025 and taking effect on 18 January 2027, payment stablecoin issuers must publish monthly reports on outstanding stablecoins and the composition of reserves, certified by the chief executive and chief financial officer and examined by a firm registered with the Public Company Accounting Oversight Board; issuers above $50bn outstanding must also produce audited annual financial statements.
Examples
The two reports illustrate different disclosure philosophies. Circle's is narrow and instant-specific, testing one sufficiency assertion at two dates. Tether's is broader, reporting a consolidated balance sheet including non-par assets and a stated excess reserve, alongside a quarterly profit of approximately $1.04bn for the first quarter of 2026.
The March 2023 USDC episode is the most instructive negative case: reserves were disclosed and verified, and the discount arose not from misstated backing but from uncertainty about access to a bank deposit over a weekend. Attestation addressed composition, not liquidity.
Risks and limitations
Point-in-time reporting invites window dressing. An issuer can hold a conservative portfolio on reporting dates and a different one in between, and nothing in a standard examination detects that; monthly cadence narrows the window without closing it.
Scope is the second limitation. An examination of a sufficiency assertion says nothing about custody arrangements, related-party exposures, encumbrance of reserve assets, or the enforceability of redemption rights. Where reserves include secured loans or affiliate positions, valuation is less verifiable than a Treasury holding.
Standards themselves are unsettled. The Center for Audit Quality has identified open questions about the PCAOB's authority over these examinations and whether PCAOB, AICPA or international standards govern. Both questions are live ahead of the January 2027 effective date.
Verified backing is also not monetary quality. The BIS Annual Economic Report 2026 argues that stablecoins fall short on the singleness of money, the property that claims are redeemable at par with central bank money with finality. An attestation can confirm assets exist; it cannot confer that.
Key metrics
Track reserves-to-liabilities coverage and the disclosed excess (Tether: $8.23bn at 31 March 2026); the share of reserves in Treasury bills and overnight repo versus non-par assets; the lag between as-of date and publication (Circle: 31 March as-of, 29 April report date); the registration status of the examining firm; and whether the issuer produces audited financial statements as well as attestations.
Related research
The IMF's Understanding Stablecoins (2025) is the best institutional survey of reserve structure and run risk. Chapter III of the BIS Annual Economic Report 2026 sets the monetary framing, and the Center for Audit Quality's analysis is the clearest account of what the US statutory regime will require of accountants.