What a dollar stablecoin actually is

For education only, not financial advice. Crypto assets are volatile and you can lose all the money you invest.

Two things people mix up

What a dollar stablecoin actually is.

A dollar stablecoin is meant to be worth exactly 1 dollar. Since July ’25, US law says what has to sit behind that dollar. People mix up the 2 different things here, the peg and the backing.

Peg, backing and what the reserve can hold

The peg is simply the promise that 1 token is worth 1 dollar, and that the company will swap it back for you at that price whenever you ask. The backing is what the company actually holds so it can keep that promise, and it’s the part that gets tested when people want their money back. Under the GENIUS Act, the reserve can hold US currency and insured bank deposits. It can hold Treasury bills, which are short-term loans to the US government, as long as they mature in 93 days or less. And it can hold certain overnight loans backed by Treasuries, known as repos, plus government money market funds and reserves at the central bank. The 93-day limit is the whole point of that rule. It means the company has to hold things it can turn into cash quickly, rather than things that pay more and take longer to sell.

Disclosure, yield and who approves an issuer

On top of that, the issuer has to publish what’s in the reserve every month, and an executive has to certify it. So you can go and look, and somebody has put their name to it. The coin can’t pay you interest or yield. Whatever that reserve earns, it doesn’t come to you. And the issuer needs a set procedure for swapping your coins back at 1 dollar each, written down in advance rather than decided on the day. Then there’s the size rule, which decides who actually is watching the company. Every issuer needs approval from somebody. If a company has under $10 billion of coins out there, its own state can approve it, as long as the state rules have been certified as substantially similar to the federal ones. Once it’s over $10 billion, it has 360 days to move onto the federal system. That’s the Federal Reserve if it’s a bank, and the Comptroller of the Currency if it isn’t. Issuers also count as financial institutions under the anti-money laundering rules, which brings a whole second set of obligations.

What the law gives you, and what it doesn’t

When you hold one of these, you own a claim on a private company. Once the law applies, it tells that company what to hold behind your claim, how fast those holdings have to turn back into cash, and how often it has to show you what’s in there. That’s a real change, and it applies from January 18th, 2027. Until then, you’re relying on whatever each company chooses to publish. The law also tells you what you’re not getting. You’re not getting a deposit, you’re not getting insurance on it, and you’re not getting paid for holding it.

When everybody asks at once

All of that works fine on an ordinary week. What I’d want to know is whether a rule built around 93-day Treasury bills holds up on the afternoon everybody’s asking for their dollars back at once. Nobody has tested at this size yet.

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This entry sets out what the law says has to sit behind a dollar stablecoin. If you think 93-day Treasury bills are enough for the day everybody wants out, or that they aren't, say so below. The questions that come back here are where a lot of these entries start.