How to Read a Stablecoin Reserve Attestation

Every major stablecoin publishes something about its reserves. The documents look similar and mean quite different things.

Attestation is not audit

An attestation is a limited engagement: an accounting firm confirms that a specific statement, prepared by management, is fairly stated as at a specific moment. An audit is far broader. It tests internal controls, examines a full period rather than a single date, and carries a formal opinion on financial statements.

Most stablecoin reserve reports are attestations. That is not inherently damning, but it bounds what you can conclude. An attestation says the money was there on the reporting date. It says very little about the day before or the day after.

Four things to check

1. The as-of date. A point-in-time snapshot can be arranged. Look for consistent monthly reporting rather than a single flattering date.
2. Composition, not just total. Short-dated Treasury bills, overnight repo and bank deposits carry very different liquidity. A total that matches the supply tells you nothing about whether it can be liquidated during a run.
3. Who holds it. Concentration in a small number of banking partners is the risk that has actually broken stablecoin pegs, not asset quality.
4. Which entity is covered. Groups often have several entities. Confirm the attested balance sits with the issuer that owes redemption.

The honest summary

A well-composed attestation from a reputable firm is meaningful evidence, and better than nothing. It is not the same as an audit, and the industry’s habit of using the words interchangeably is worth resisting.