The U.S. dollar stablecoin market has expanded by $71 billion, or 30 percent, since April 2025 to reach roughly $308 billion in total market capitalization, according to a new report published July 31, 2026, by researchers at the Federal Reserve Banks of New York and Boston. The growth period coincides with the passage of the GENIUS Act in July 2025, which created the first federal regulatory framework for payment stablecoins. The analysis examines how shocks from outside the cryptocurrency industry can reshape the reserve assets backing these digital tokens, which are pegged to the U.S. dollar at $1.00 per token.
The stablecoin sector remains heavily concentrated, with the two biggest issuers—Tether (USDT) and USD Coin (USDC)—controlling more than 80 percent of industry assets, the report states. But their reserve compositions differ sharply: USDC's attested reserves consist mainly of cash and short-term U.S. government securities, while corporate bonds, gold bars, Bitcoin, secured loans, and "other investments" made up nearly 24 percent of USDT's attested reserves as of December 2025. The Circle Reserve Fund (CRF), a money market mutual fund that holds approximately 86 percent of USDC's reserve assets as of March 2026, underwent dramatic changes following the March 2023 collapse of Silicon Valley Bank, where Circle had kept about 8 percent of USDC's reserves.
Following SVB's failure, the CRF's weighted average maturity—a gauge of interest-rate sensitivity—dropped below that of the median Treasury-only money market fund and has stayed below the 5th percentile of the distribution among such funds, according to the authors. The fund's holdings of repurchase agreements jumped from zero to over 90 percent of its net assets immediately after the bank's collapse, and though that share has declined somewhat, it still stands at 69 percent—above the distribution of repo holdings among Treasury-only funds. Meanwhile, USDC's direct bank deposits shifted from a mix of Global Systemically Important Banks (GSIBs) and non-GSIBs in February 2023 to predominantly GSIBs by April 2023, with Circle reporting "in excess of 90%" of cash held at GSIBs. The share of Fixed Income Clearing Corporation-sponsored repos, whose ultimate counterparties are generally entities with a net demand for funding such as hedge funds, grew rapidly starting in late 2024 and reached 77 percent by the fourth quarter of 2025.
The SVB event triggered a shift in the type of risk held by one of the largest stablecoin issuers, moving away from interest-rate risk and toward counterparty risk, the report concludes. By shortening the maturity of its holdings and concentrating in repos—especially those cleared through FICC—the CRF reduced its exposure to fluctuations in interest rates but increased its reliance on specific counterparties, including hedge funds seeking funding. The concentration of cash deposits in GSIBs reflects a similar trade-off: lower risk of bank failure but greater dependence on a small number of large institutions. These changes highlight the growing interconnectedness between traditional finance and new, emerging financial technologies, the authors write, underscoring how shocks in conventional banking can rapidly reshape the structure of digital asset reserves even as the stablecoin market continues its rapid expansion.