You open a stablecoin monthly reserve report, and the screen is full of audit terms and tables. You don't know which line to focus on.
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First, remember three core numbers: outstanding tokens, total reserve holdings, and reserve composition ratio. These three numbers directly tell you "is there enough money behind the coins" and "what is that money."
Step 1: Find the comparison between "Total Reserve Holdings" and "Outstanding Tokens"
[What to do]: Confirm whether reserves cover all stablecoins in circulation.
[How to do it]: Find these two numbers in the report:
Outstanding Tokens: The total number of stablecoins circulating in the market.
Reserve Holdings: The total value of cash, treasury bonds, and other assets held by the issuer.
Circle's monthly attestation reports typically present reserve holdings side by side with outstanding tokens, and the attestation opinion is issued by a Big Four accounting firm (such as Deloitte) under AICPA standards. Tether completed its first independent audit of its 2025 financial statements by KPMG in August 2026. The audit showed that reserves exceeded liabilities by about $6.8 billion at the end of 2025, but the full audit report has not been made public to this day.
[Completion standard]: Reserve holdings ≥ outstanding tokens. If it is less, that means reserves are insufficient, which is a danger signal. Tether's audit result shows "reserves exceed liabilities," not "every USDT has a corresponding liquid reserve" — the difference is around $6.8 billion, but the composition and stability of this difference need further judgment based on the steps below.
Here is a key distinction: comparing outstanding tokens with reserve holdings only tells you "whether the amount is enough." Tether's audit result shows that total assets did exceed total liabilities, but for USDT holders, you still need to confirm: what specific assets make up the portion of reserves that covers USDT liabilities — are they cash and short-term treasury bonds that can be used immediately, or gold and Bitcoin that need to be sold first to turn into cash?
Step 2: Look at "Reserve Composition" — Which money can be used immediately
[What to do]: Confirm what proportion of reserve assets is "highly liquid assets" and what proportion is "volatile assets."
[How to do it]: Find the breakdown of reserve assets in the report and pay attention to the following categories:
| Asset Type | Liquidity Characteristics | Risk Description |
|---|---|---|
| Cash and bank demand deposits | Extremely high, can be redeemed instantly | The safest form of reserve |
| Short-term U.S. Treasury bonds (<93 days) | High, can be sold quickly on the secondary market | Good liquidity, but concentrated selling carries discount risk |
| Overnight repurchase agreements | High | Short-term liquidity instrument |
| Gold, Bitcoin | Relatively low, need to be sold first to turn into cash | High price volatility, significant discount possible when selling |
| Secured loans, corporate bonds | Low | Highest liquidity risk |
As of the end of 2025, among Tether's roughly $187.75 billion in reserves, about $47 billion (about 25%) fell into categories such as gold, Bitcoin, and secured loans. This means if these assets depreciate significantly, profit buffers may not necessarily be enough to fill the excess gap.
[Completion standard]: You can clearly state what proportion of total reserve holdings can be directly used (cash + overnight) and what proportion needs to be sold before it can be turned into cash (treasury bonds + other assets).
Step 3: Distinguish between "Attestation" and "Audit"
[What to do]: Confirm what type of report you are looking at and how credible it is.
[How to do it]: Look for keywords in the report title or statement section:
Attestation: Narrower in scope, usually a snapshot check at a specific point in time, not a comprehensive financial audit. Most stablecoin issuers publish attestation reports monthly. For example, Paxos publishes monthly attestation reports issued by KPMG.
Audit: Broader in scope, covering financial records, internal controls, and operational processes for the entire reporting period, with higher credibility. Tether completed its first full audit in August 2026, but the full audit report has still not been made public.
[Completion standard]: You can say whether what you are looking at is an attestation report or an audit report. If it is an attestation, understand that it only verifies reserves on a specific date and does not cover changes between two reports.
Troubleshooting
Case A: You cannot find "Reserve Holdings" in the report Some reports use terms like "Total Assets" or "Reserve Position." Search for these words. If you really cannot find it, go directly to the issuer's transparency page and download the latest monthly attestation report — this number is usually there.
Case B: The report only says "fully covered" but gives no specific numbers If a report only says "reserves exceed circulation" without disclosing specific amounts, its transparency is limited. Consider comparing reports from other issuers (such as Circle, Paxos) as a reference.
Case C: The report is issued by an unknown audit firm Reports issued by firms other than the Big Four accounting firms (PwC, Deloitte, KPMG, EY) generally have lower industry recognition. Both Paxos and Circle's attestation reports are issued by Big Four accounting firms.
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Final Verification
After checking these three numbers, you should be able to answer:
Are total reserve holdings greater than outstanding tokens?
What proportion of reserves is made up of highly liquid assets (cash + short-term treasury bonds)?
Is this report an attestation or an audit?
How to verify completion: Find the latest report on the issuer's official transparency page, confirm that reserve assets ≥ outstanding tokens, and that the proportion of highly liquid assets in the reserve composition is clearly visible. If Tether's full audit report is still not public, it means external investors cannot independently verify key details such as audit scope, reserve breakdown, and related-party transactions.
Next action:If you hold USDC or USDT, go to Circle's or Tether's official website right now and download the most recent reserve report. Find the three key numbers mentioned above and record them in your notes. This habit is far more useful than getting anxious when you see price fluctuations.
