When a stablecoin issuer issues stablecoins into the market, it normally keeps a corresponding asset in reserve to secure, or back, the stablecoin’s peg. As redemptions requests arrive, these reserves get used up. Because a stablecoin’s reserves are key to guaranteeing stability, the big, centralized stablecoin issuers have adopted the practice of providing information about their assets. In regularly published attestation reports, an independent auditor is asked to offer assurance about the quantity and composition of reserves backing the stablecoin.
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