Stablecoins are digital belongings whose worth is pegged to that of a fiat forex, usually the U.S. greenback at a peg of $1.00 per token. In a earlier weblog submit, we described the fast development of stablecoins by means of early 2025, highlighted adjustments in stablecoins’ reserve-asset composition, and examined their reactions to Bitcoin value shocks. On this submit, we doc the expansion of stablecoins since our final submit. Then, we look at how shocks from outdoors the crypto trade can impression the composition of stablecoins’ reserve belongings. For our case research, we use the 2023 failure of Silicon Valley Financial institution (SVB) and its impression on USD Coin (USDC, issued by Circle), the second-largest stablecoin by market capitalization.
Latest Progress of Stablecoins
Since our final submit in April 2025, the market capitalization of U.S. greenback stablecoins has elevated by $71 billion (30 p.c) to about $308 billion just lately, as proven within the chart under. This era coincides with the passage of the GENIUS Act in July 2025, which established the primary federal regulatory framework for cost stablecoins.
Stablecoin Market Capitalization
Supply: CoinGecko.
Notice: The vertical strains point out, respectively, SVB’s failure in March 2023 and the passage of the GENIUS Act in July 2025.
The stablecoin trade stays extremely concentrated, with the 2 largest issuers, Tether (USDT) and USDC, accounting for over 80 p.c of trade belongings. The reserve composition of those stablecoins differs considerably: USDC’s attested reserves consist primarily of money and short-term U.S. authorities securities. In distinction, company bonds, gold bars, Bitcoin, secured loans, and “different investments” accounted for almost 24 p.c of USDT’s attested reserves as of December 2025.
Reserve-Asset Composition and Exterior Shocks
In prior posts, we examined the impression of constructive and unfavorable crypto value shocks on internet flows into stablecoins. Right here we research a complementary query: how do non-crypto shocks have an effect on internet flows into stablecoins and the composition of their reserve belongings? This query is essential given stablecoins’ rising interconnectedness with conventional monetary markets. To reply it, we doc the adjustments in USDC’s reserve belongings following SVB’s failure in March 2023.
On March 11, 2023, Circle reported that roughly 8 p.c of USDC’s reserves had been held at SVB, which had been positioned into FDIC receivership the day gone by. Following Circle’s announcement, USDC’s secondary market value dropped significantly under $1.00, and it skilled notable internet outflows. Along with these results, the composition of the Circle Reserve Fund (CRF), a cash market mutual fund (MMF) whose shares can solely be bought by Circle, modified considerably. (The CRF accounts for roughly 86 p.c of USDC’s reserve belongings as of March 2026.)
The chart under studies the weighted common maturity (WAM)—a measure of interest-rate sensitivity—for the CRF versus the median U.S. Treasury-only (TO) MMF. Previous to SVB’s collapse, the CRF’s WAM exceeded that of the median TO MMF. Following SVB’s failure, the CRF’s WAM fell under that of the median TO fund and has remained under the fifth percentile of the WAM distribution of TO MMFs. Thus, following SVB’s failure, the CRF decreased its interest-rate threat publicity, on steadiness.
Weighted Common Maturity: Circle Reserve Fund vs. Treasury-Solely MMFs
Sources: iMoneyNet; authors’ calculations.
Notes: The information are at a month-to-month frequency. “TO MMF”: Treasury-Solely MMF. “CRF”: Circle Reserve Fund (inception date is November 2022). The sunshine-blue shaded space denotes the fifth to the ninety fifth percentile vary of the WAM distribution amongst TO MMFs. The vertical line signifies when SVB failed in March 2023.
Turning to portfolio composition, the charts under present that, following SVB’s collapse, the CRF’s holdings of repurchase agreements (repos) spiked from zero to over 90 p.c of its internet belongings. This share has since retreated some however nonetheless stands at 69 p.c, above the distribution of TO MMFs’ repo holdings as a share of internet belongings. Thus, following the SVB shock, the CRF decreased its interest-rate threat publicity and considerably restructured its counterparty threat publicity.
Repo Holdings: Circle Reserve Fund vs. Treasury-Solely MMFs
Sources: iMoneyNet; authors’ calculations.
Notes: The information are at a month-to-month frequency. “TO MMF”: Treasury-Solely MMF. “CRF”: Circle Reserve Fund (inception date is November 2022). The sunshine-blue shaded space denotes the fifth to the ninety fifth percentile vary of repo holdings as a share of internet belongings amongst TO MMFs. The vertical line signifies when SVB failed in March 2023.
Circle Reserve Fund’s Repo Holdings by Counterparty Kind
Sources: Crane information; authors’ calculations.
Notes: The information are at a quarterly frequency. “FICC”: Mounted Revenue Clearing Company.
Inspecting the CRF’s repo counterparty composition extra intently, we observe a fast shift beginning in late 2024: The share of Mounted Revenue Clearing Company (FICC)-sponsored repos, whose final counterparties are usually entities with a internet demand for funding, akin to hedge funds, grew quickly and reached 77 p.c by 2025:This fall (see the chart above).
Subsequent, we flip to USDC’s reserve belongings held outdoors of the CRF, which have averaged 12 p.c of whole reserves for the reason that begin of 2023. How has the composition of those non-CRF reserves advanced since SVB’s failure? The chart under depicts the fraction of USDC’s reserves held as financial institution deposits. USDC’s financial institution deposits rose briefly after SVB’s failure however have since remained under the degrees that prevailed earlier than SVB’s failure.
Additionally, the kinds of banks holding USDC’s money modified markedly, shifting from a mix of International Systemically Essential Banks (GSIBs) and non-GSIBs (together with SVB and Signature Financial institution) in February 2023 to predominantly GSIBs by April 2023—with Circle reporting “in extra of 90% of money” held at GSIBs. In different phrases, after SVB’s collapse, USDC’s financial institution deposits turned, and have remained, concentrated in GSIBs.
Fraction of USDC’s Reserves Held at Banks
Proportion of USDC’s belongings
Sources: Circle’s voluntary disclosures; authors’ calculations.
Summing Up
Following SVB’s failure in March 2023, the composition of USDC’s major reserve asset, held in an MMF, modified notably: the typical maturity of its reserve belongings declined considerably; its repo holdings surged and have become concentrated in FICC in recent times. As well as, its direct deposits with banks shifted from a mix of GSIBs and non-GSIBs to GSIBs. Total, the SVB occasion triggered a change in the kind of threat held by one of many largest stablecoin issuers, away from interest-rate threat and towards counterparty threat. These adjustments spotlight the rising interconnectedness between conventional finance and new, rising monetary applied sciences.
Kenechukwu Anadu is a vp of the Federal Reserve Financial institution of Boston’s Supervision, Regulation, and Credit score Division.
Pablo Azar is a monetary analysis economist within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Sean Baker is a threat analyst within the Federal Reserve Financial institution of Boston’s Supervision, Regulation, and Credit score Division.
Marco Cipriani is head of Cash and Funds Research within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Thomas M. Eisenbach is a monetary analysis advisor within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Mattia Landoni is an affiliate professor of finance at China Europe Worldwide Enterprise Faculty (CEIBS).
Gabriele La Spada is a monetary analysis advisor within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Marco Macchiavelli is an assistant professor of Finance on the College of Massachusetts, Amherst.
J. Christina Wang is a principal economist and coverage advisor within the macroeconomic/monetary markets part of the Federal Reserve Financial institution of Boston.
Learn how to cite this submit:
Kenechukwu Anadu, Pablo D. Azar, Sean Baker, Marco Cipriani, Thomas M. Eisenbach, Mattia Landoni, Gabriele La Spada, Marco Macchiavelli, and J. Christina Wang, “Stablecoins and (Non)Crypto Shocks: A 2026 Replace,” Federal Reserve Financial institution of New York Liberty Road Economics, July 31, 2026, https://doi.org/10.59576/lse.20260731
BibTeX: View | Obtain
@article{AnaduAzarBakerCiprianiEisenbachLandoniLaSpadaMacchiavelliWang2026,
writer={Anadu, Kenechukwu and Azar, Pablo D. and Baker, Sean and Cipriani, Marco and Eisenbach, Thomas M. and Landoni, Mattia and La Spada, Gabriele and Macchiavelli, Marco and Wang, J. Christina},
title={Stablecoins and (Non)Crypto Shocks: A 2026 Replace},
journal={Liberty Road Economics},
word={Liberty Road Economics Weblog},
quantity={July 31},
12 months={2026},
url={https://doi.org/10.59576/lse.20260731}
}
Disclaimer
The views expressed on this submit are these of the writer(s) and don’t essentially replicate the place of the Federal Reserve Financial institution of New York or the Federal Reserve System. Any errors or omissions are the duty of the writer(s).
