Stablecoin reserves: where issuers hold them and who earns

Stablecoin issuers hold their reserves in short Treasury bills, repo, bank deposits and money market funds and keep the interest. Holders who want a return have to put the stablecoin to work somewhere else, such as a stablecoin vault.

$62.5 billion of the reserves behind Circle's USDC sat in one fund on 5 October 2026: the Circle Reserve Fund, a government money market fund that BlackRock manages, with a 7-day yield of 3.82%. That is about 84% of the $74.3 billion of USDC in circulation. Stablecoin reserves at the large issuers look much the same. Circle, Tether, Paxos and Anchorage hold short Treasury bills, overnight repo, bank deposits and money market shares, and Anchorage's USDtb holds a tokenized Treasury fund. The issuer earns the interest on all of it.

Holders of a US payment stablecoin get none of that income, because the GENIUS Act bars issuers from paying interest or yield. Holders in the EU are in the same position under MiCA. The yield reaches a holder only when the holder deposits the coin somewhere that earns, such as a lending market or a stablecoin vault holding tokenized funds.

Where do the largest issuers hold their stablecoin reserves?

Circle publishes its numbers on its transparency page, and Tether's latest quarter is in its Q2 2026 attestation release of 31 July. At 31 March 2026, Tether put its direct and indirect Treasury bill exposure at about $141 billion, next to about $20 billion of gold and $7 billion of bitcoin (Tether, 1 May 2026). The issuer pages for PYUSD and USDtb list each monthly report. For how these coins score on freezes, licences and peg history, see the safest stablecoin comparison.

How do issuers earn on Treasury bills, repo, deposits and money market funds?

Each reserve asset pays a short-term dollar rate:

• Treasury bills. The issuer buys a bill below face value and collects the difference at maturity. The GENIUS Act caps eligible bills at 93 days to maturity.
• Overnight reverse repo. The issuer lends cash for one night against Treasury collateral and earns the repo rate.
• Bank deposits. Cash at banks pays whatever rate the bank offers, often less than bills, and covers same-day redemptions.
• Government money market funds. A fund such as USDXX holds bills and repo and pays a daily yield, net of its 0.17% expense ratio in USDXX's case.
• Tokenized Treasury funds. Shares in a fund like BUIDL sit onchain and pay the fund's yield. Anchorage's USDtb holds BUIDL this way.

A reserve held in overnight repo and short bills tracks the Federal Reserve's policy rate closely and falls quickly after a cut. Cash at banks earns less. It's still the fastest asset to pay out on a busy redemption day. USDXX keeps its weighted average maturity at 15 days (BlackRock, 5 October 2026). Tether's gold and bitcoin pay no interest at all. Their value moves with the market, and Tether also reports a buffer of excess reserves ($4.11 billion at 30 June 2026). The largest tokenized Treasury funds pay roughly the same rate as the bills they hold.

What does the GENIUS Act allow as stablecoin reserves?

Section 4(a)(1)(A) of the GENIUS Act, signed on 18 July 2025, requires at least 1:1 identifiable reserves made up of:

• US coins and currency, or balances at a Federal Reserve Bank
• demand deposits at an insured bank or credit union
• Treasury bills, notes or bonds with 93 days or less to maturity
• overnight repo and reverse repo backed by Treasuries, tri-party, centrally cleared or with a creditworthy counterparty
• shares in a registered government money market fund that holds only the assets above
• other similarly liquid federal government assets a regulator approves, and tokenized forms of the eligible reserves

The issuer can't pledge or rehypothecate those reserves. Every month it must publish the reserve composition on its website, with the average tenor and custody location of each category. A registered public accounting firm examines that report monthly, and the CEO and CFO certify it to the regulator. Issuers above $50 billion of stablecoins outstanding that aren't SEC reporting companies also publish an annual audited financial statement. Section 4(a)(11) bars paying holders "any form of interest or yield" for holding, using or retaining the coin.

The Act takes effect on the earlier of 18 January 2027 or 120 days after final rules. The OCC proposed its implementing rules in February 2026 (Federal Register, 2 March) and has said it aims to finalise them by November (PYMNTS, 20 August 2026). Treasury published its own proposal on 18 August 2026, with comments due 19 October. The GENIUS and CLARITY yield rules post covers the CLARITY Act too, the market structure bill that stalled when a Senate cloture vote failed on 15 September 2026.

What does MiCA allow as reserves for euro and dollar stablecoins in the EU?

Under MiCA, a fiat stablecoin is usually an e-money token, and its rules have applied since 30 June 2024. Article 54 requires at least 30% of the funds received to sit in separate accounts at credit institutions. The rest goes into secure, low-risk, highly liquid instruments in the same currency as the token. EBA technical standards set a higher deposit share for tokens classed as significant. Significant e-money tokens also need an independent reserve audit every six months (Article 58). Article 50 bars issuers and crypto-asset service providers from granting interest on the token.

Rules in the UK, Singapore, Hong Kong and other markets are in the stablecoin regulation guide. General information, not legal advice.

What proof of reserves should a stablecoin issuer publish?

Under the GENIUS Act, the floor is a monthly reserve report examined by a registered accounting firm. MiCA asks significant tokens for a reserve audit every six months. In an attestation, an accounting firm examines the issuer's statement that reserves cover the tokens outstanding at a point in time, under AICPA standards in the US. Paxos, Circle and Anchorage publish one each month, and Tether publishes one each quarter.

Proof of reserves is a different tool, and it comes from exchanges. Kraken's version puts client balances into a Merkle tree, which lets each client check their own balance, while an accountant checks signatures for the onchain wallets. Kraken notes that it can't rule out hidden encumbrances. A fiat-backed coin's bills and deposits sit offchain. Oracle feeds such as Chainlink Proof of Reserve post reported reserve data onchain and can halt minting when reserves fall short.

Going by the GENIUS Act and the larger issuers' pages today, an issuer's reserve disclosures should cover:

• tokens outstanding and total reserves, by chain, with a date
• reserve composition by asset type, with average tenor and custody location
• the named accounting firm and its monthly examination report
• an annual audited financial statement, which GENIUS requires above $50 billion outstanding
• the redemption policy and every fee, with 7 days' notice before a change

Who keeps the reserve income, and why do holders get none?

The issuer keeps it. Distribution partners take a share. At USDXX's 3.82% 7-day yield, $74.3 billion of USDC throws off roughly $2.8 billion a year before costs (our arithmetic, 6 October 2026). Tether reported about $1.5 billion of net operating profit for the second quarter of 2026. The guide to how stablecoins make money works through the rate maths and Circle's revenue share with Coinbase.

Holders get nothing because both regimes ban it. The GENIUS Act bars a permitted issuer from paying holders interest or yield in cash, tokens or other consideration. The OCC's proposal goes further and presumes a breach where an issuer routes yield to holders through an affiliate or related third party. Teams weighing whether to create a stablecoin or use a stablecoin issuance platform face the same rule.

Where does yield reach stablecoin holders?

Yield reaches a holder through a separate product that the holder chooses to deposit into. In a stablecoin vault, the holder deposits USDC and receives vault shares. A curator, typically a hedge fund or asset manager, places the stablecoins in tokenized money market funds or lending markets within set limits. The return accrues to the shares after fees. The coin's issuer pays nothing into it.

Upshift is onchain yield infrastructure for fintechs and asset managers with stablecoin balances. Companies holding stablecoins on their balance sheet usually start with a Conservative vault that holds 24/7 tokenized money market funds, and can add Core or Enhanced vaults later on the same integration. Upshift has had more than $550 million deposited at peak across 50+ vaults on more than 30 chains. Its contracts have had 11 smart contract audits by 6 independent firms (audit list). Issuers of tokenized funds can also give holders an instant USDC exit through Upshift's liquidity for tokenized funds.

A vault holding BUIDL or a similar fund passes on the fund's eligibility rules: US depositors still need to be qualified purchasers. Vaults can be limited to allow-listed wallets or a single depositor, or open to anyone. They add smart contract and oracle risk on top of the fund, and the USDC kept for withdrawals earns little. Returns aren't guaranteed. Always make sure to do your own research and be aware of these and any other risks before depositing.

Companies with idle stablecoins can see how Upshift works for treasuries.

Frequently asked questions

Where do stablecoin issuers put their reserves to earn yield?

Mostly in short US Treasury bills, overnight repo backed by Treasuries, bank deposits and government money market funds. About 84% of USDC's reserves sit in BlackRock's Circle Reserve Fund (5 October 2026), and USDtb holds BlackRock's BUIDL. The issuer keeps the interest.

What proof of reserves should a stablecoin issuer publish?

A monthly reserve report showing tokens outstanding and reserve composition, examined by a named accounting firm, plus the redemption policy and fees. US issuers above $50 billion outstanding also publish audited annual financial statements. Onchain feeds can add live reserve data between reports.

How do stablecoin issuers make money?

From the interest on their reserves, minus distribution and operating costs. Tether reported about $1.5 billion of net operating profit for Q2 2026. The full breakdown for Tether and Circle has the numbers.

What is the difference between a reserve attestation and proof of reserves?

An attestation is an accounting firm's examination of the issuer's reserve statement at a point in time. Proof of reserves usually means a cryptographic check, such as a Merkle tree of client balances, which works for onchain assets and can't see bank deposits or Treasury bills.

Can a stablecoin issuer hold tokenized Treasuries as reserves?

Yes. The GENIUS Act counts eligible reserves "in tokenized form", and Anchorage's USDtb is backed almost entirely by BlackRock's BUIDL. Final US rules on how regulators treat each tokenized fund are still pending.

Can stablecoin holders earn the reserve yield?

No. The GENIUS Act and MiCA both bar the issuer from paying it. Holders earn by depositing the coin into a lending market or a stablecoin vault, where the return comes from the vault's strategies and isn't guaranteed.

Keep reading

• How do stablecoins make money? The reserve-income maths for issuers and holders.
• Tokenized treasuries. The largest funds and how each pays back in USDC.
• Stablecoin regulation. Licences, reserves and yield rules by country.
• What is the safest stablecoin? Ten coins scored on reserves and redemption.