Stablecoin issuers regularly publish attestation reports to verify that their tokens are fully backed by reserve assets. But what do these reports actually tell you, and how can you interpret them accurately?
What Is a Stablecoin Attestation?
A stablecoin attestation is a third-party review – typically done by an independent accounting or auditing firm – that evaluates whether a stablecoin issuer’s reserves are equal to or greater than the number of stablecoins in circulation. This process is often confused with an audit, but they are not the same.
Attestations offer a snapshot at a specific point in time, confirming reserve balances without deep inspection of financial controls.
Audits, on the other hand, are more comprehensive and evaluate internal systems, controls, and the fairness of financial reporting.
Most stablecoins, including USDT (Tether) and USDC (Circle), publish monthly attestation reports instead of undergoing full audits.
REPORT | #Tether Reports Over $1B in Operating Profit and Adds Over 46 Million User Wallets in Q1 2025
The first quarter of 2025 also marked Tether’s debut under regulatory oversight in El Salvador.https://t.co/yBR5yoItb7 $USDT @Tether_to pic.twitter.com/HvQFFHCsZ5
— BitKE (@BitcoinKE) May 2, 2025
Why Are Attestations Important?
Stablecoins are expected to maintain a 1:1 peg to fiat currencies like the US dollar. If a stablecoin is not fully backed, there is a risk that users won’t be able to redeem their tokens for the corresponding fiat value, undermining trust in the asset.
Attestations provide transparency and are critical in assuring the public and regulators that the stablecoin is indeed fully collateralized.
Who Prepares These Reports?
Attestation reports are usually conducted by accounting firms following standards like those set by the American Institute of Certified Public Accountants (AICPA). The firms examine account balances and reserve holdings but do not express an opinion on the issuer’s internal processes or risk controls.
Common firms involved in stablecoin attestations include:
BDO Italia (for Tether)
Deloitte (for Circle), and
Grant Thornton (previously for Circle).
What Do These Reports Contain?
While formats vary by issuer and accounting firm, most stablecoin attestation reports include:
Date of Attestation – The exact date and time when the reserve snapshot was taken.
Total Stablecoins in Circulation – The number of issued tokens that are backed by reserves.
Total Assets in Reserve – The breakdown of assets held to back the stablecoins.
Types of Reserve Assets – Categories may include cash, U.S. Treasury bills, commercial paper, repurchase agreements, and money market funds.
Liabilities – Occasionally included to provide net assets backing the stablecoins.
Assurance Statement – The accounting firm’s statement confirming the assets match or exceed liabilities at the time of review.
Key Red Flags to Watch For
When reading an attestation report, pay attention to these red flags:
Excessive Exposure to Risky Assets: If a large share of reserves is in high-risk or illiquid instruments, redemption during market stress could be compromised.
Lack of Detail: Vague or incomplete disclosures about asset composition may signal a lack of transparency.
Infrequent Reporting: If reports are not published regularly, it could indicate inconsistent or unreliable backing.
Conflicts of Interest: Ensure the third-party firm has a reputation for independence and is not tied to the issuer.
Limitations of Attestations
Attestations are not foolproof. They do not:
Verify reserves continuously – only at one moment in time.
Audit the issuer’s internal controls or risk management.
Provide assurance that the stablecoin will maintain its peg under market stress.
For example, a stablecoin may appear fully backed during a quiet market period but could face challenges during mass redemptions or bank failures.
Stablecoin attestation reports are a useful tool for evaluating the transparency and credibility of a stablecoin issuer. While not as rigorous as audits, they can offer a degree of assurance—if you know what to look for. By understanding how to interpret these reports and being alert to potential red flags, users and institutions can better assess the stability and trustworthiness of the digital assets they rely on.
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