You open a stablecoin reserve report and see that assets are far greater than liabilities, so you think "this coin is safe."
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But if you only look at assets and ignore the structure of liabilities, what you see may just be a number on paper.
Assets and Liabilities: Read Both Sides Together
On a stablecoin issuer's balance sheet, the most important item on the liability side is "stablecoins issued" — that is, the USDT or USDC held by users. This part is the money the issuer owes to users.
The asset side is the reserve assets the issuer uses to back those liabilities: cash, treasury bills, gold, bitcoin, and so on.
Looking only at "total assets" ignores the composition of liabilities, their maturity, and most importantly — whether the issuer can quickly turn those assets into cash when users want to redeem.
Looking Only at Assets Misses Three Key Points
First misjudgment: More assets does not mean better liquidity
Tether completed its first full independent financial audit by KPMG in August 2026. The results showed that as of the end of 2025, reserve assets exceeded liabilities by USD 6.814 billion. Assets were indeed greater than liabilities, but that is not the real issue.
The issue is the composition of the reserves. As of June 30, 2026, out of Tether's roughly USD 187.75 billion in total reserves, about USD 47 billion — around 25% — fell into categories that do not qualify as eligible reserve backing under the GENIUS Act. That includes about USD 18.8 billion in gold, about USD 13.5 billion in secured loans, about USD 5.8 billion in bitcoin, and about USD 3.7 billion in publicly listed stocks.
These assets are recorded in the "asset" column on the balance sheet, but when users rush to redeem, they need to be sold first before they can be turned into cash. If market conditions are bad, the sale price may be lower than the book value.
Second misjudgment: Ignoring the "instant" nature of liabilities
The liabilities of a stablecoin are different from those of an ordinary company. An ordinary company's liabilities may have clear maturity dates, but a stablecoin's liabilities can be redeemed at any time.
In 2022, Tether completed about USD 7 billion in redemptions within 48 hours, roughly 10% of its reserves at the time, without pausing redemptions. This case shows that the asset side and liability side need to be matched in real time, not just "enough on paper" at a single point in time.
Third misjudgment: The boundaries of the audit entity and report disclosure
The KPMG audit covered Tether International, S.A. de C.V., the sole issuing entity of USDT. But the Tether group may have different internal entity structures, and the audit conclusion the public can see does not cover the full picture of the entire group.
Another issue is that the audit report itself has not been fully disclosed to the public. What the public sees is the audit conclusion — an unqualified opinion — and a few core figures. But key details such as the full notes to the financial statements, the breakdown of reserve asset categories, and related-party transaction disclosures have not been publicly released. A private company not publishing its full report is not illegal by itself, but it does mean outside analysts cannot independently verify the most critical details.
Comparison
| Dimension | Circle (USDC) | Tether (USDT) |
|---|---|---|
| Reserve asset composition | Mainly overnight reverse repos and U.S. Treasury bills, relatively transparent structure | Includes about USD 47 billion in non-eligible assets such as gold, bitcoin, and secured loans |
| Audit status | Public company, subject to SEC reporting requirements | Completed first independent audit, but the audit report has not been fully disclosed to the public |
| Liability-side transparency | Regularly discloses reserve composition details | Quarterly attestation reports are public, but full audit report details are limited |
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What You Should Look At
Next time you read a stablecoin reserve report, look at these two things together:
Asset side: How much can be turned into cash immediately? Cash plus overnight reverse repos can be paid out instantly. Short-term treasury bills can be sold fairly quickly, but gold and bitcoin need to find buyers first.
Liability side: Who holds it, and can it be tracked? After the audit, Tether's CEO publicly stated that Tether had verified in 2022 its ability to handle USD 7 billion in redemptions within 48 hours. But the result of such a stress test depends on market conditions at the time.
How to check this in practice: Visit the issuer's official transparency page and look at the share of "cash and overnight reserves" in the latest reserve report. If that share is clearly low, while gold, bitcoin, secured loans, and other illiquid assets make up a high share, it means that during heavy redemptions the issuer would need to sell a large amount of illiquid assets and may face price loss risk.
Next step: If you hold stablecoins, spend 10 minutes comparing the reserve composition of USDT and USDC side by side. Focus on "how much is in the most liquid part" and "how much needs to be sold before it can be paid out" — this information is more useful than the conclusion that "assets are greater than liabilities."
