Unpacking Stablecoin Reserves: Cash, Treasuries, and Repo
Stablecoins are often touted as simple tokens pegged to the US dollar, but their underlying reserve structure is far more complex. A stablecoin's reserve typically consists of three main components: cash held in banks for immediate redemptions, short-term U.S. Treasuries for principal safety, and overnight Treasury repurchase agreements for same-day liquidity.
USDC, one of the largest fiat-backed stablecoins, reports $72.9 billion in circulation and $73.1 billion in total reserves as of July 23, 2026, with most assets held in a BlackRock-run government money market fund that can hold cash, T-bills, and overnight Treasury repo.
The reserve structure is designed to preserve principal and make redemptions painless, but it also means the issuer earns interest on reserves while holders generally do not, unless stated. At scale, these allocations can nudge Treasury yields and repo conditions, as seen in the 2026 Annual Economic Report by the Bank for International Settlements.
Most large fiat-backed stablecoins split their reserves across highly liquid, short-term dollar assets, with a common trio of bank deposits, short-dated U.S. Treasury bills and notes, and overnight Treasury repurchase agreements. Other reserve vehicles are emerging, such as State Street's Stablecoin Reserves Money Market Fund (SSRXX), which shows about 95.77% Treasury repurchase agreements and 4.23% Treasury debt.
The liquidity waterfall is a key concept in stablecoin reserves: cash at banks pays for the smallest, most frequent redemptions, while overnight Treasury repo bridges between T-bills and cash. The reserve manager follows this order during stress or large redemptions, prioritizing bank cash, then rolling or unwinding overnight Treasury repos.
Government money market funds operate under SEC Rule 2a-7, constraining risk and keeping portfolios short. They maintain minimum daily and weekly liquid assets, monitor weighted average maturity, and limit exposure to any one issuer. The 2023 SEC reforms toughened parts of this regime, and government funds are not subject to swing pricing requirements that institutional prime funds face.