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Stablecoins are digital assets whose value is pegged to that of a fiat currency, typically the U.S. dollar at a peg of $1.00 per token.\u00a0 In a previous blog post<\/a>, we described the rapid growth of stablecoins through early 2025, highlighted changes in stablecoins\u2019 reserve-asset composition, and examined their reactions to Bitcoin price shocks. In this post, we document the growth of stablecoins since our last post. Then, we examine how shocks from outside the crypto industry can impact the composition of stablecoins\u2019 reserve assets. For our case study, we use the 2023 failure of Silicon Valley Bank (SVB) and its impact on USD Coin (USDC, issued by Circle), the second-largest stablecoin by market capitalization.<\/p>\n Recent Growth of Stablecoins<\/p>\n Since our last post in April 2025, the market capitalization of U.S. dollar stablecoins has increased by $71 billion (30 percent) to about $308 billion recently, as shown in the chart below. This period coincides with the passage of the GENIUS Act in July 2025, which established the first federal regulatory framework for payment stablecoins.<\/p>\n Stablecoin Market Capitalization<\/p>\n The stablecoin industry remains highly concentrated, with the two largest issuers, Tether (USDT) and USDC, accounting for over 80 percent of industry assets. The reserve composition of these stablecoins differs significantly: USDC\u2019s attested<\/a> reserves consist primarily of cash and short-term U.S. government securities. In contrast, corporate bonds, gold bars, Bitcoin, secured loans, and \u201cother investments\u201d accounted for nearly 24 percent of USDT\u2019s attested<\/a> reserves as of December 2025.<\/p>\n In prior posts, we examined the impact of positive<\/a> and negative<\/a> crypto price shocks on net flows into stablecoins. Here we study a complementary question: how do non-crypto shocks affect net flows into stablecoins and the composition of their reserve assets? This question is important given stablecoins\u2019 increasing interconnectedness with traditional financial markets. To answer it, we document the changes in USDC\u2019s reserve assets following SVB\u2019s failure in March 2023.<\/p>\n On March 11, 2023, Circle reported<\/a> that approximately 8 percent of USDC\u2019s reserves were held at SVB, which had been placed into FDIC receivership the previous day. Following Circle\u2019s announcement, USDC\u2019s secondary market price dropped considerably below $1.00, and it experienced notable net outflows<\/a>. In addition to these effects, the composition of the Circle Reserve Fund (CRF)<\/a>, a money market mutual fund (MMF) whose shares can only be purchased by Circle, changed significantly.\u00a0 (The CRF accounts for approximately 86 percent of USDC\u2019s reserve assets as of March 2026.) \u00a0\u00a0<\/p>\n The chart below reports the weighted average maturity (WAM)\u2014a measure of interest-rate sensitivity\u2014for the CRF versus the median U.S. Treasury-only (TO) MMF. Prior to SVB\u2019s collapse, the CRF\u2019s WAM exceeded that of the median TO MMF. Following SVB\u2019s failure, the CRF\u2019s WAM fell below that of the median TO fund and has remained below the 5th percentile of the WAM distribution of TO MMFs. Thus, following SVB\u2019s failure, the CRF reduced its interest-rate risk exposure, on balance.<\/p>\n Weighted Average Maturity: Circle Reserve Fund vs. Treasury-Only MMFs<\/p>\n Turning to portfolio composition, the charts below show that, following SVB\u2019s collapse, the CRF\u2019s holdings of repurchase agreements (repos) spiked from zero to over 90 percent of its net assets. This share has since retreated some but still stands at 69 percent, above the distribution of TO MMFs\u2019 repo holdings as a share of net assets. Thus, following the SVB shock, the CRF reduced its interest-rate risk exposure and substantially restructured its counterparty risk exposure.<\/p>\n Repo Holdings: Circle Reserve Fund vs. Treasury-Only MMFs<\/p>\n Circle Reserve Fund\u2019s Repo Holdings by Counterparty Type<\/p>\n Examining the CRF\u2019s repo counterparty composition more closely, we observe a rapid shift starting in late 2024:\u00a0 The share of Fixed Income Clearing Corporation (FICC)-sponsored repos, whose ultimate counterparties are generally entities with a net demand for funding, such as hedge funds, grew rapidly and reached 77 percent by 2025:Q4 (see the chart above).<\/p>\n Next, we turn to USDC\u2019s reserve assets held outside of the CRF, which have averaged 12 percent of total reserves since the start of 2023. How has the composition of these non-CRF reserves evolved since SVB\u2019s failure? The chart below depicts the fraction of USDC\u2019s reserves held as bank deposits. USDC\u2019s bank deposits rose briefly after SVB\u2019s failure but have since remained below the levels that prevailed before SVB\u2019s failure.\u00a0<\/p>\n Also, the types of banks holding USDC\u2019s cash changed markedly, shifting from a combination of Global Systemically Important Banks (GSIBs) and non-GSIBs (including SVB and Signature Bank) in February 2023 to predominantly GSIBs by April 2023\u2014with Circle reporting \u201cin excess of 90% of cash<\/a>\u201d held at GSIBs. In other words, after SVB\u2019s collapse, USDC\u2019s bank deposits became, and have remained, concentrated in GSIBs. \u00a0<\/p>\n Fraction of USDC\u2019s Reserves Held at Banks<\/p>\n Percentage of USDC\u2019s assets<\/p>\n \tSources: Circle\u2019s voluntary disclosures; authors\u2019 calculations.<\/p>\n Summing Up<\/p>\n Following SVB\u2019s failure in March 2023, the composition of USDC\u2019s primary reserve asset, held in an MMF, changed notably: the average maturity of its reserve assets declined significantly; its repo holdings surged and became concentrated in FICC in recent years. In addition, its direct deposits with banks shifted from a combination of GSIBs and non-GSIBs to GSIBs. Overall, the SVB event triggered a change in the type of risk held by one of the largest stablecoin issuers, away from interest-rate risk and toward counterparty risk. These changes highlight the growing interconnectedness between traditional finance and new, emerging financial technologies.<\/p>\n Kenechukwu Anadu is a vice president of the Federal Reserve Bank of Boston\u2019s Supervision, Regulation, and Credit Department.<\/p>\n Pablo Azar<\/a> is a financial research economist in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n Sean Baker is a risk analyst in the Federal Reserve Bank of Boston\u2019s Supervision, Regulation, and Credit Department.<\/p>\n Marco Cipriani<\/a> is head of Money and Payments Studies in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.\u00a0\u00a0<\/p>\n Thomas M. Eisenbach<\/a> is a financial research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n Mattia Landoni is an associate professor of finance at China Europe International Business School (CEIBS).<\/p>\n Gabriele La Spada<\/a> is a financial research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group. \u202f\u00a0<\/p>\n Marco Machiavelli is an assistant professor of Finance at the University of Massachusetts, Amherst.<\/p>\n J. Christina Wang is a\u00a0principal economist and policy advisor\u00a0in the macroeconomic\/financial markets section of the Federal Reserve Bank of Boston.<\/p>\n \n How to cite this post: @article{AnaduAzarBakerCiprianiEisenbachLandoniLaSpadaMachiavelliWang2026, Disclaimer![\"Two](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/LSE_2026_stablecoin-update_cipriani_ch-1a-b-1.png\")
Source: CoinGecko.
Note: The vertical lines indicate, respectively, SVB\u2019s failure in March 2023 and the passage of the GENIUS Act in July 2025.<\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/LSE_2026_stablecoin-update_cipriani_ch-2-1.png\")
Sources: iMoneyNet; authors\u2019 calculations.
Notes: The data are at a monthly frequency. \u201cTO MMF\u201d: Treasury-Only MMF. \u201cCRF\u201d: Circle Reserve Fund (inception date is November 2022). The light-blue shaded area denotes the 5th to the 95th percentile range of the WAM distribution among TO MMFs. The vertical line indicates when SVB failed in March 2023.<\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/LSE_2026_stablecoin-update_cipriani_ch-3-4.png\")
Sources: iMoneyNet; authors\u2019 calculations.
Notes: The data are at a monthly frequency. \u201cTO MMF\u201d: Treasury-Only MMF. \u201cCRF\u201d: Circle Reserve Fund (inception date is November 2022). The light-blue shaded area denotes the 5th to the 95th percentile range of repo holdings as a percentage of net assets among TO MMFs. The vertical line indicates when SVB failed in March 2023.<\/p>\n![\"Area](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/LSE_2026_stablecoin-update_cipriani_ch-4-2.png\")
Sources: Crane data; authors\u2019 calculations.
Notes: The data are at a quarterly frequency. \u201cFICC\u201d: Fixed Income Clearing Corporation.<\/p>\n![\"portrait-of-kenechukwu-anadu-\"](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/portrait-of-kenechukwu-anadu-.png\")
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<\/p>\n![\"Marco](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/cipriani_marco_90x90.jpg\")
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Kenechukwu Anadu, Pablo D. Azar, Sean Baker, Marco Cipriani, Thomas M. Eisenbach, Mattia Landoni, Gabriele La Spada, Marco Machiavelli, and J. Christina Wang, \u201cStablecoins and (Non)Crypto Shocks: A 2026 Update,\u201d Federal Reserve Bank of New York Liberty Street Economics, July 31, 2026, https:\/\/doi.org\/10.59576\/lse.20260731<\/a>
\n BibTeX: View<\/a> | Download\n <\/p>\n
\n author={Anadu, Kenechukwu and Azar, Pablo D. and Baker, Sean and Cipriani, Marco and Eisenbach, Thomas M. and Landoni, Mattia and La Spada, Gabriele and Machiavelli, Marco and Wang, J. Christina},
\n title={Stablecoins and (Non)Crypto Shocks: A 2026 Update},
\n journal={Liberty Street Economics},
\n note={Liberty Street Economics Blog},
\n number={July 31},
\n year={2026},
\n url={https:\/\/doi.org\/10.59576\/lse.20260731}
\n}<\/p>\n
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).<\/p>\n","protected":false},"excerpt":{"rendered":"Kenechukwu Anadu, Pablo D. Azar, Sean Baker, Marco Cipriani, Thomas M. Eisenbach, Mattia Landoni, Gabriele La Spada, Marco…\n","protected":false},"author":2,"featured_media":310596,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[41248,117446,9,11,10,117447],"class_list":["post-310595","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-cryptocurrencies","tag-financial-shocks","tag-new-york","tag-new-york-headlines","tag-new-york-news","tag-stablecoins"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/310595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=310595"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/310595\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/310596"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=310595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=310595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=310595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}