How to know a stablecoin payment will hold its value
When a deal closes and the funds hit wallets as stablecoins, the first question every professional in that transaction asks is the same one: is this actually worth a dollar? The question sounds simple. The answer requires understanding several distinct layers of risk that most people in deal-making have never needed to think about before. Stablecoins are not interchangeable. Not all pegs are built the same way, and not all of them hold under stress. Knowing which ones do — and why — is now a practical competency for anyone who gets paid onchain.
What a stablecoin peg actually is and how it holds
A stablecoin peg is the mechanism that keeps a stablecoin’s value tied to an external asset, most commonly the U.S. dollar. That sounds straightforward, but the engineering underneath it varies enormously depending on the type of stablecoin and who issued it.
To achieve stability, stablecoin issuers use a combination of economic incentives, collateral reserves, and smart contract logic. These mechanisms work together to absorb market volatility and keep the token price anchored. The key word is “mechanisms” — plural, because the peg is not a single thing. It’s a system with multiple moving parts, and the strength of that system is what determines whether $1.00 in is $1.00 out on the other side of your deal.
The strength of any stablecoin peg depends on reserve quality, redemption design, transparency, liquidity, and the regulatory framework surrounding the issuer. When professionals are accepting payment in stablecoins, they need to be able to evaluate each of those factors — not abstractly, but with specific knowledge about the coin they’re receiving.
The redemption mechanism is the backbone
The most reliable peg-holding mechanism for fiat-backed stablecoins is also the simplest: users can redeem one stablecoin for one dollar, creating an arbitrage mechanism that pulls the price back toward $1. Traders buy below $1 and redeem at $1, or mint new tokens when the price trades above $1. This constant arbitrage pressure, executed continuously by institutional participants, is what keeps the secondary market price tight to the peg in normal conditions.
The 1:1 peg holds because anyone with reserves above a meaningful threshold can mint or redeem at par with the issuer, creating arbitrage that pushes secondary-market prices back to $1. This is different from price stability in traditional assets, where there’s no guaranteed redemption mechanism. With a properly structured fiat-backed stablecoin, the arbitrage floor is not speculative — it’s a contractual right held by institutional counterparties who act on it continuously.
What the reserves actually are
Fiat-collateralized stablecoins, such as USDT and USDC, hold cash or cash equivalents in regulated banks. But the composition of those reserves matters enormously, and it differs significantly between issuers.
For USDC, the structure is transparent and narrow. Each USDC is backed 1:1 by short-dated US Treasury bills and cash held at federally regulated US banks. Reserves sit in the Circle Reserve Fund, a SEC-registered government money market fund managed by BlackRock, and are reported monthly by Deloitte. Drilling further, roughly 80% of the fund is short-dated US Treasury bills with under 90-day maturity, with the remainder as overnight Treasury repurchase agreements and cash deposits. The fund is structured to redeem at par on a same-day basis under normal conditions.
USDT is structured differently. USDT is issued by Tether Limited, backed by a broader reserve mix that includes Treasuries, secured loans, Bitcoin and gold among other assets. The result: USDC reserves are simpler and more liquid; USDT reserves carry higher yield but more credit, market, and disclosure risk. Neither of these profiles is secret — they are published by each issuer — but comparing them requires knowing where to look and what the categories mean.
The attestation question: what “verified” actually means
One of the most common misconceptions among professionals new to stablecoin payments is the assumption that an attestation and an audit are the same thing. They are not, and the difference has practical implications for how confident you should be in a reserve claim.
A reserve attestation is a report in which an independent CPA firm confirms that an issuer’s statement about the reserves backing a stablecoin is fairly stated as of a specific date. Attestations are not the same as audits, and the distinction matters when a procurement, risk, or compliance team asks where the dollars are. An attestation is a point-in-time examination. It confirms that on a specific date, the reserves matched the supply. It does not provide continuous assurance, it does not cover forward-looking solvency, and it does not examine operational risks at custodian banks.
For USDC, Circle publishes monthly third-party attestations from Deloitte & Touche LLP confirming that USDC in circulation is fully backed. Attestations are signed agreed-upon-procedures reports, not full audits, but they verify reserve totals, composition, and the issuance figure on a stated date. Additionally, the Reserve Fund itself files daily portfolio holdings with the SEC under Form N-MFP, which any reader can pull directly from EDGAR. This is a rare level of public verifiability. The underlying fund is regulated, its holdings are filed daily with a federal regulator, and the monthly attestation cross-checks against those filings.
For USDT, the cadence and depth differ. Tether publishes quarterly attestation reports from BDO Italia. It has never produced a full audit from a Big Four firm. Tether has said publicly that Big Four firms have been reluctant to take it on because of perceived reputational and regulatory risk in the broader crypto sector. The result for USDT holders is quarterly point-in-time confirmations from BDO Italia rather than a continuous audit opinion.
This is not necessarily a reason to reject USDT for professional use, but it is a reason to understand what you are accepting. The verification chain is shallower, the reporting cadence is quarterly rather than monthly, and the reserve composition is more complex. For a deal professional receiving a single payment, the practical risk may be acceptable. For someone holding a large float of stablecoins for any period of time, the distinction is material.
If you want to verify a stablecoin’s reserve status before a deal closes, it can be done in minutes. To verify USDC reserves: read the latest monthly attestation PDF on Circle’s transparency page, confirm the snapshot date is within the last 35 days, cross-check the Reserve Fund’s USDXX holdings on SEC EDGAR for the most recent N-MFP filing, and compare circulating supply against DeFiLlama’s USDC dashboard. The three numbers should line up within rounding. A material discrepancy is the structural anomaly worth investigating further.
The two categories of risk that actually break pegs
Understanding why stablecoins lose their peg is not academic. There have been notable depeg events, and each one teaches a different lesson about where the structural risk sits.
Algorithmic failure: what happens when there’s nothing real behind the peg
Algorithmic stablecoins like UST rely purely on market mechanisms and token economics to maintain their peg, without real asset backing. During market stress, these mechanisms can break down, creating death spirals where selling pressure causes depegging, which triggers more selling.
The clearest example of this failure mode is TerraUSD. Unlike other major stablecoins such as Tether or Circle, which are backed by off-chain liquid assets like Treasuries, UST was not supported by off-chain collateral but by a smart contract that allowed an exchange of one unit of UST to $1 worth of Terra’s native currency, LUNA, and vice versa. To incentivize adoption of UST, the Anchor protocol offered a very high yield of 19.5% to UST depositors, which generated significant inflows and led to a large increase in UST issuance.
When confidence broke, it broke completely. As users exchanged UST for LUNA, the price of LUNA precipitously fell, leading to increasing dilution, which further depressed the price of LUNA and resulted in a dramatic “death spiral” where over just three days, the LUNA supply increased from 1 billion to 6 trillion and the LUNA price decreased from $80 to almost zero. The TerraUSD depeg event demonstrates how a $60 billion ecosystem can unravel within days when fundamental design flaws meet adverse market conditions.
The lesson is structural: unlike fiat-backed stablecoins that maintain reserves in traditional assets, UST’s value was primarily supported by the market’s faith in its algorithmic mechanism. When there is a transparent, liquid, complete pool of assets behind a coin, a run is functionally not possible. When there isn’t, a loss of confidence can wipe out the entire peg overnight.
For any professional receiving payment in a stablecoin: if the coin in question does not have clearly disclosed, independently verified, fiat-denominated reserves, the peg is held by market psychology alone. That is not a basis for accepting it in settlement of a deal.
Custodian risk: what happens when the reserves are real but inaccessible
The USDC depeg of March 2023 is the more instructive case for professionals using regulated stablecoins, precisely because the reserves were real. The problem was access.
USDC issuer Circle had $3.3 billion deposited with Silicon Valley Bank, which represented roughly 8% of the dollars backing USDC. Shortly after, Circle publicly announced that it was unable to access a portion of its dollar reserves held as deposits at SVB. This announcement precipitated a surge in redemption requests by holders of USDC, causing the stablecoin to lose its peg against the dollar on secondary markets when Circle shut down primary market operations over the weekend.
After the bank’s collapse, USDC lost its $1 peg, falling as low as 86 cents on Saturday. The peg broke not because the reserves were fraudulent, but because primary market redemptions — the mechanism that keeps the arbitrage floor in place — were suspended over a weekend when banking operations were closed. The SVB banking crisis underscored a significant weak point in the interplay between USD-based stablecoins and the traditional U.S. banking system, with the latter operating on restricted hours. This dichotomy becomes pronounced during weekends when efforts to restore stablecoin pegs are limited due to lack of liquidity.
USDC regained its peg to the U.S. dollar after federal banking and finance regulators said all depositors in Silicon Valley Bank would be made whole and would have access to their funds. The peg held, ultimately. But the 72-hour window during which it didn’t was a material risk for anyone who needed to transact in that period.
The response from Circle was structural: Circle has taken steps to reduce risk from the banking system by holding substantially all of the cash portion of the reserve at global systemically important banks. GSIBs are widely recognized as the safest banks, with the highest capital, liquidity and supervisory requirements in the world. The custodian concentration risk that broke the peg in March 2023 was directly addressed by distributing reserves across the most systemically protected counterparties available.
The regulatory layer and what it means for recipient confidence
The regulatory environment around stablecoins has changed materially, and that change directly affects how much confidence a professional can place in the peg of a regulated stablecoin.
The regulatory landscape for digital assets reached a significant milestone with the passage of the GENIUS Act in July 2025. This landmark legislation establishes a comprehensive framework for payment stablecoins in the United States, addressing a critical gap in financial regulation. The GENIUS Act carefully distinguishes between payment stablecoins and other digital assets, requiring 100% reserves and implementing disclosure requirements similar to those in traditional banking.
The mechanics of the law matter for deal professionals. Issuers are required to hold at least one dollar of permitted reserves for every one dollar of stablecoins issued. The law limits permitted reserves to coins and currency, deposits held at insured banks and credit unions, short-dated Treasury bills, repurchase agreements and reverse repos backed by Treasury bills, government money market funds, central bank reserves, and any other similar government-issued asset approved by regulators.
Issuers are required to establish and disclose stablecoin redemption procedures and to issue periodic reports of outstanding stablecoins and reserve composition, which must be certified by executives and examined by registered public accounting firms. And critically for any professional concerned about priority in a failure scenario: the bill grants stablecoin holders priority over all other claims against the issuer in bankruptcy.
That last point deserves emphasis. Before the GENIUS Act, the insolvency treatment of stablecoin reserves was legally ambiguous — it was unclear whether holders would have any priority claim over issuer assets in a bankruptcy. The Act resolves that ambiguity explicitly in favor of token holders. For a professional receiving stablecoin as settlement consideration, that legal clarity changes the risk calculus meaningfully.
USDC operates inside US and EU regulatory perimeters; USDT operates from El Salvador after relocating from the British Virgin Islands and is excluded from EU venues under MiCA non-compliance findings. The regulatory perimeter matters because it determines which frameworks apply, which disclosures are required, and which recourse mechanisms exist. A coin issued inside a regulated jurisdiction by a permitted issuer now carries a fundamentally different risk profile than one operating outside those frameworks.
The stablecoins worth trusting in a deal and why
The market is not homogeneous. Despite past struggles, established stablecoins like Tether USD, USD Coin, and DAI have shown improved ability to maintain their $1 peg. However, newer and partially algorithmic stablecoins such as USDD and FRAX remain more volatile, relying on market arbitrage for peg retention. This divergence is not a matter of opinion — it’s a structural difference visible in reserve composition, audit cadence, and regulatory standing.
For professionals receiving deal proceeds in stablecoins, the practical filter comes down to three questions. Does the coin have fully disclosed, third-party attested reserves in high-quality liquid assets — cash and short-dated Treasuries — not mixed with illiquid or volatile assets? Does the issuer operate inside a regulated jurisdiction with enforceable redemption rights and holder priority in insolvency? And has the coin survived at least one significant market stress event without permanently losing its peg?
USDC answers all three affirmatively. USDC is issued by Circle Internet Financial, backed primarily by short-dated US Treasuries and cash held at regulated US banks, attested monthly by Deloitte. Its one historical depeg was driven by a custodian event, not a reserve shortfall, and it recovered fully within days once the banking situation resolved. The structural response — concentrating reserves at GSIBs and routing the bulk through a BlackRock-managed, SEC-registered money market fund — addressed the specific vulnerability that caused the depeg.
USDT has a different profile: USDT has held its peg through every major stress event since 2017 but trades at thinner cash-equivalent reserves than USDC. Its track record is compelling over a long period, but its reserve complexity, offshore domicile, and quarterly-rather-than-monthly attestation cadence mean the verification burden on the recipient is higher. Major stablecoins like USDC and USDT have historically held close to $1, even during periods of market stress. But the peg can drift temporarily, and smaller or algorithmic stablecoins have failed entirely.
The practical takeaway is clean: stick to the coins with the deepest reserve disclosure, the most frequent attestations, the most liquid reserve composition, and the strongest regulatory standing. Beyond USDC and USDT, USDC and PYUSD share the narrowest reserve profile — regulated US issuers, monthly attestations, Treasury-heavy reserves. Each of these has a knowable, verifiable basis for the peg. The rest of the stablecoin market, for deal settlement purposes, carries risks that are difficult to quantify in advance.
What “settlement finality” means in this context
There is an important distinction between the peg holding and settlement being final. For a deal professional, both matter, but they are separate questions.
When funds arrive in a stablecoin wallet, the transaction is final on the blockchain. There is no pending settlement, no clearing delay, no float. The token is either there or it isn’t. But whether that token is worth $1.00 when you need to convert it or transact with it depends on the peg mechanisms described above — and on when you need liquidity relative to any stress event.
This is why professional deal structures should default to the most transparent, most liquid, most regulated stablecoin available for the jurisdiction and network in use. Payments that close on a Friday afternoon will not be redeemable at par through the primary market until Monday morning. That’s not a defect in the system; it’s an operational reality of any stablecoin whose reserves sit in the traditional banking system. The SVB episode made this visible in sharp relief.
When Shaka routes deal payments across multiple recipients in a single transaction, each wallet receives the same stablecoin at the same moment. The professional who structured the deal — the broker, the advisor, the closing attorney — has already determined the currency. That choice, made before the payment link is executed, is where the peg question lives. Once the transaction closes and the wallets are credited, the value question comes down entirely to which stablecoin was chosen and how well-designed its peg mechanisms are.
How to read the signals before you accept a stablecoin payment
The information needed to evaluate a stablecoin’s peg is public and accessible. The problem is that most deal professionals haven’t needed to build the habit of checking it. Here is what a disciplined professional actually looks at:
Reserve composition: What specific assets back the coin? Short-dated Treasuries and cash are the safest. Secured loans, cryptocurrency holdings, and equity positions add complexity and risk. The issuer’s transparency page publishes this breakdown. Read it, not the marketing summary.
Attestation cadence and firm: Monthly attestations from a recognized firm mean more than quarterly attestations from a less prominent one. The two largest fiat-backed stablecoins have converged on similar reserve composition but kept measurably different transparency stacks. The gap between a monthly Deloitte attestation with SEC-filed daily holdings and a quarterly attestation without CUSIP-level disclosure is material due diligence, not pedantry.
Regulatory domicile: Is the issuer subject to enforceable rules in a jurisdiction you can identify? Does the GENIUS Act apply? Does MiCA? An offshore issuer with no regulatory home presents enforcement and insolvency risk that a regulated issuer does not.
Stress history: Has this coin survived a market dislocation? A coin that has only operated in calm conditions has not demonstrated peg durability. The track records of USDC and USDT include stress events that tested the peg mechanisms under real conditions.
Chain and liquidity: A stablecoin reserve is the off-chain pool of assets backing every token in circulation. Composition determines whether the peg holds under redemption stress and whether the issuer can satisfy regulatory liquidity tests. Separately, the chain the stablecoin runs on affects redemption friction. A token with solid reserves but concentrated on a chain with limited liquidity can face practical conversion delays even if the peg is fundamentally sound.
The honest answer on peg confidence
No stablecoin peg is unconditionally guaranteed. The Bank for International Settlements reported that of the 68 stablecoins it evaluated, no stablecoin was able to maintain its closing price in perfect parity with its peg. Even the best-structured coins show intraday variation. The question is not whether the peg is mathematically perfect — it never is — but whether the structural forces pushing it back to $1 are robust enough that any deviation is temporary and modest.
For the coins with real reserves, frequent attestations, regulated issuers, and functioning arbitrage mechanisms, the answer to that question is yes. The peg holds because there is a contractual right to redeem, institutional players with access to that redemption window enforce it continuously, and the underlying assets are liquid enough to honor the obligation. The deviations that do occur are typically small, brief, and tied to specific events that resolve when banking operations normalize.
For coins without those structural features — algorithmic designs, opaque reserves, unregulated issuers, or coins too small to attract meaningful arbitrage — the peg is a product of market confidence alone. That is a fundamentally different risk, and it is not appropriate for professional deal settlement where payment finality matters.
The deal professionals who will navigate this well are the ones who treat stablecoin selection the same way they treat any other due diligence question: with specificity, with primary-source verification, and without assuming that because something is called “stable” it has earned that description. The peg is an engineering problem. The documentation to evaluate it is public. That makes stablecoin confidence, for a careful practitioner, entirely achievable.
