What are stablecoins backed by?

Yes, the two largest stablecoins are backed mostly by US Treasuries. Both are fiat-backed stablecoins that track the US dollar. The International Monetary Fund (IMF) reports that USD Coin (USDC) holds 40 percent of its reserve in short-term US Treasury bills and 45 percent in overnight reverse repos with US Treasuries as collateral. The rest is deposits at financial institutions. Tether (USDT) holds nearly 75 percent in short-term US Treasuries, including through reverse repos, about 5 percent in bitcoin and a similar amount in gold (IMF, December 4, 2025).

The European Central Bank (ECB) lists the reserves of both as US Treasuries, reverse repos, shares in money market funds, cash and bank deposits, as at September 30, 2025. Their Treasury holdings put the two issuers among the largest holders of US Treasury bills. Their reserves are comparable in size to the 20 largest money market funds (ECB, November 2025).

Under the MiCA reserve requirements, the issuer of an e-money token keeps at least 30 percent of the funds received in separate accounts at credit institutions (Article 54). The rest goes into secure, low-risk assets that qualify as highly liquid financial instruments with minimal market, credit and concentration risk. These assets are denominated in the same currency as the token.

An e-money token is made of two things. In law it is a claim against the issuer (Article 49(2)). On the issuer's balance sheet it is matched by these deposits and instruments, safeguarded under Article 7(1) of the E-Money Directive 2009/110/EC. When the European Banking Authority (EBA) classifies a token as significant, an e-money institution that issues it follows the reserve rules for asset-referenced tokens in Articles 36 to 38 (Article 58).

MiCAR requires the issuer of an asset-referenced token to hold a reserve at all times, valued at market prices and at least equal to all claims of the holders (Article 36(1) and (7)). The reserve is legally segregated from the issuer's estate, so that the issuer's creditors have no recourse to it in insolvency (Article 36(2)).

A stablecoin backed by gold is an asset-referenced token under MiCA, and the EU register lists no authorized issuer of one. MiCA treats stablecoins and commodity-backed coins alike when they reference assets: a token that references gold or a basket of commodities is an asset-referenced token. On request, its issuer pays the market value in money or delivers the referenced assets (Article 39(2)).

The interim MiCA register of the European Securities and Markets Authority (ESMA) lists no issuer of asset-referenced tokens in its update of September 24, 2026. Commodity-backed and other asset-backed variants "remain a small fraction of the market", the ECB said in May 2026 (ECB, May 8, 2026).

Algorithmic stablecoins work with a protocol that increases or decreases the token supply as demand changes. MiCA judges them by what they promise: recital 41 applies Title III or IV to any token that meets the definition of an asset-referenced or e-money token, "irrespective of how the issuer intends to design the crypto-asset". An algorithmic crypto-asset that references no asset falls under Title II, the general rules for crypto-assets.

The ECB chart of stablecoin market size marks the "Terra collapse": the de-pegging of the algorithmic stablecoin TerraUSD and the collapse of its reserve asset, LUNA (ECB, November 2025).

In Germany and Austria the MiCA reserve rules apply directly. BaFin supervises issuers in Germany (section 3 of the Kryptomärkteaufsichtsgesetz, KMAG). For e-money tokens, BaFin states that both MiCA and the Payment Services Supervision Act (ZAG) apply. The FMA supervises in Austria (section 1 of the MiCA-Verordnung-Vollzugsgesetz).

In Frankfurt, AllUnity, a joint venture of DWS, Flow Traders and Galaxy, launched the euro stablecoin EURAU on July 31, 2025. AllUnity calls it 100 percent reserved under a multi-bank model: a consortium of banks in Europe acts as reserve banks, and DWS advises on the reserve portfolio (AllUnity, July 31, 2025).

Switzerland is outside the EU, so MiCA does not apply there. FINMA asks who bears the risk of the reserve. Assets managed for the account and risk of the holder point to a collective investment scheme; assets managed for the account and risk of the issuer point to a deposit under banking law. Where a bank default guarantee replaces the banking license, each holder needs a claim of their own against the Swiss bank, and the guarantee covers at least all public deposits including interest (FINMA, July 26, 2024).

This page gives no legal advice.