Stablecoins explained: USDT, USDC, reserves and networks

What a stablecoin is

A stablecoin is a crypto token built to hold a steady price, most often one US dollar. Canada’s Financial Consumer Agency (FCAC) puts it simply: stablecoins are crypto assets that are “meant to maintain a stable value”. USDT, issued by Tether, and USDC, issued by Circle, are both dollar stablecoins. Holding one is not the same as holding dollars in a bank: in Canada, the FCAC notes, “Federal and provincial/territorial deposit insurance plans don’t cover crypto assets”. Ask what protection, if any, applies where you live.

A stablecoin is worth a dollar only as long as people trust that the issuer holds enough assets to pay it back and that the token can be sold for a dollar when you need to. Each issuer publishes its own account of that.

How Tether says USDT is backed

• The claim: “All Tether tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s Reserves.”
• The reports: Tether says it has “published Reserves reports quarterly”, with assurance reports by the accounting firm BDO Italia. Its own page adds that the reserve reports “are prepared by Tether management”, that they “are not financial statements”, and that BDO’s reports “are limited solely to the Reserves report and the corresponding total assets and total liabilities as of a specific date.”
• What the reserves were: for its report as of 30 June 2026, Tether listed total assets of $187.75 billion against total liabilities of $183.64 billion. It put 74.91% of reserves in cash, cash equivalents and other short-term deposits (mostly US Treasury bills), 10.03% in precious metals, 7.17% in secured loans, 3.09% in bitcoin, 2.79% in other investments and 2% in public equities.
• Who can redeem: Tether’s fees page sets a minimum of 100,000 USD to redeem tokens directly, a fee per redemption of “The greater of $1,000 or 0.1%” and a 150 USD verification fee. Anyone holding less sells USDT to someone else — on an exchange or person to person — at whatever price the market pays at that moment.

How Circle says USDC is backed

• The claim: “USDC is always redeemable 1:1 for US dollars”. Circle says most of the reserve sits in the Circle Reserve Fund, “an SEC-registered 2a-7 government money market fund”, and the rest in cash at large banks.
• The checks: reserve holdings are disclosed weekly, and “a Big Four accounting firm provides monthly third-party assurance that the value of USDC reserves are greater than the amount of USDC in circulation.” On 15 October 2026 the page showed $72.5 billion of USDC in circulation and $72.7 billion of reserves.
• Who can redeem: Circle’s USDC Terms are explicit: “You may not redeem USDC with Circle unless and until you open a Circle Mint account”. Those accounts have eligibility rules and are offered only in supported jurisdictions, and a holder who cannot open one “is not entitled to redeem USDC with Circle”. Most holders again sell to someone else.

In the European Union, the MiCA rules give holders of e-money tokens (stablecoins that track one official currency) a right to get their money back from the issuer at full face value. Outside the EU, your rights depend on the issuer’s terms and on local law.

What can go wrong

1. Losing the peg. The FCAC warns: “Stablecoins are also risky. Some have not maintained a stable value.” The EU’s three financial supervisors write that “Stablecoins may not be so stable”, especially in stressed markets. The UK Financial Conduct Authority (FCA) recalls TerraUSD in 2022: “the value fell quickly which led to panic, as the coin’s value collapsed and detached from the US Dollar.” It also notes that “Tether was fined $41 million by US regulators in October 2021 for making untrue and misleading statements about the extent to which it was linked to the dollar.”
2. Frozen tokens. Issuers can stop tokens from moving. Tether’s transparency page lists “quarantined” tokens, which it defines as tokens “that have been frozen at their last reported address”. Circle’s terms say “Circle reserves the right to block the transfer of USDC to and from an address on chain as permitted under the blocklisting policy”, and that if you send USDC to, or receive it from, a blocked address, “Circle may freeze such USDC”. Accepting stablecoins from a stranger therefore carries a risk of its own.
3. Unclear rules. In Circle’s own words, “The regulatory status of USDC and blockchain technology is unclear or unsettled in many jurisdictions.”

Networks: TRC20, ERC20 and the rest

The same stablecoin is issued on several blockchains. Tether’s integration page says its tokens “exist on multiple blockchains” and that “1 TETHER token on Blockchain X = 1 TETHER token on Blockchain Y”. It lists USDT as an ERC20 token on Ethereum and as a “TRC20 Token via Tron Blockchain”, among others. Circle publishes the contract address of USDC on “every supported mainnet and testnet blockchain”.

Those copies do not move between networks by themselves. A withdrawal on TRC20 must go to an address that receives USDT on Tron; an exchange or wallet that does not support that network for that token may never credit it. Circle’s terms warn its account holders that USDC sent “to a wallet or address that does not support USDC” will be “lost forever”, and that a blockchain transfer “is irreversible and Circle does not have the ability to reverse or recall any transaction once initiated.” Tether’s fees page asks users to “exercise extreme care when depositing tokens”: after a deposit mistake it “may, in certain limited cases and in its sole discretion” try to help recover tokens, for a fee.

Also check that the network is one the issuer still supports. Tether says it “is no longer issuing or obligated to redeem Tether Tokens on the Kusama, Bitcoin Cash SLP, Omni Layer, EOS and Algorand blockchains.” On 18 October 2026, its transparency page showed no USDT in circulation on BNB Smart Chain, and Circle’s list of USDC contracts did not include Tron. Circle’s terms also note that others can create “copies” or “wrappers” of USDC that Circle has no obligation to support. If a platform offers a stablecoin on a network missing from the issuer’s own list, ask who issues that token and how it is redeemed.

Checks before you send or hold a stablecoin

1. Pick the same token and the same network on both screens — the withdrawal page and the deposit address page.
2. Make sure the receiving platform lists that network for that token, then copy the address exactly; a small test transfer first costs one more fee but can save the rest.
3. Look up the withdrawal fee for each network on the platform’s own fee page before you choose one.
4. Read the issuer’s transparency page yourself and note the date of the latest report.
5. Remember that crypto is risky and that the rules on holding and using stablecoins differ by country; our “is crypto legal” pages quote what each country’s regulators say.