Why this page exists

Across the USD1 network of educational sites, each domain focuses on a single idea found in its name. Here, that idea is balances. We explain how balances for USD1 stablecoins (digital tokens designed to hold a fixed value redeemable one-to-one for U.S. dollars) are represented on blockchains, shown by custodians and exchanges, reconciled for operations and audits, and presented in financial reporting.

The aim is practical clarity in plain English, with citations so you can verify the details and read further. No endorsements, no issuer marketing, and no investment tips.

What a “balance” means for USD1 stablecoins

When people say “my balance,” they might be referring to one or more of the following:

  1. On-chain token balance (the recorded quantity held by a public address on a particular blockchain). For typical token contracts, this is the value returned by the balanceOf function that wallets and explorers display. On many networks, USD1 stablecoins follow the ERC‑20 interface, which standardizes balanceOf, transfer, and allowance mechanics so that wallets can show holdings consistently. [1]

  2. Custodial account balance (a statement from a wallet app or broker that holds tokens for you). Here, you rely on the provider’s internal ledger. Your account balance may not equal what a block explorer would show for the provider’s omnibus address at any instant, because the provider tracks sub-accounts off-chain.

  3. Exchange account balance (funds available to trade or withdraw on an exchange). This is also an internal ledger entry. Exchanges often maintain pooled on-chain addresses and move funds among hot, warm, and cold storage.

  4. Accounting balance (the quantity and carrying value recorded in your books). This reflects your internal records after reconciliations, cutoffs, and valuation.

These four views are related but not identical. On-chain balances are public, deterministic, and machine verifiable for a given address and block height (a “block height” is the sequential number of a block in the chain). Custodial and exchange balances are claims measured by contracts and platform rules. Accounting balances summarize the balances you control or own, after adjustments.

Key insight: a “balance” is a context-bound number. To avoid confusion, always specify what balance (on-chain, custodial, exchange, or accounting), where it resides (which chain or platform), and when it is measured (the cutoff timestamp).

Where balances live: self-custody, custodians, and exchanges

Self-custody wallets

A self-custody wallet (software or hardware that stores private keys) lets you control the private keys that authorize transfers. Your USD1 stablecoins are not “inside” the wallet device; they are recorded on-chain. The device holds keys that unlock the ability to move them. If you lose those keys without a recovery method, you lose the ability to move the tokens.

Pros: direct control, no platform counterparty risk for mere holding.
Tradeoffs: personal responsibility for backups, phishing resistance, and transaction fee management.

Custodians

A digital asset custodian (a regulated entity that safekeeps keys on your behalf) records your USD1 stablecoins position in an internal ledger and typically stores keys in a combination of secure hardware and operational controls. Reputable custodians publish independent assurance reports and follow attestation standards recognized in accounting. [2]

Pros: institutional security operations, multi-user controls, segregation of duties.
Tradeoffs: reliance on the custodian’s solvency and controls; withdrawal windows may apply during maintenance or stress events.

Exchanges

Exchanges keep an internal order-book and ledger of customer balances. Your exchange balance might differ from a real-time on-chain snapshot because the platform batches deposits and withdrawals, and it may use omnibus addresses. When reconciling, rely on the exchange’s official statements, not random explorer guesses about which coins are “yours.”

Practical note: some exchanges provide proof-of-reserves summaries. Treat those as assurance signals, not guarantees. See the proof-of-reserves section below for how to read them.

Reading a block explorer without miscounting

A block explorer (a website or app that displays blockchain data) is a powerful tool for verifying USD1 stablecoins balances. Here is a safe, repeatable approach that avoids common traps:

  1. Confirm the exact token contract. Many chains host look‑alike tokens. Use the issuer’s official documentation or a trusted registry to find the canonical contract address for the specific chain. With ERC‑20‑style tokens, explorers show the contract address, total supply, and the decimals parameter. [1]

  2. Check the address case and network. A balance on one network says nothing about balances on another network. If you bridge tokens, you are typically burning on one network and minting a representation on another, or locking in a contract and minting elsewhere. Do not add balances across networks without understanding whether those are separate supplies or wrapped representations.

  3. Use the token tab on the explorer’s address page. Explorers usually distinguish between a chain’s native coin used for fees and token holdings. The token tab aggregates balances by token contract and shows transfers specific to that contract.

  4. Note the cutoff. Because blockchains update continuously, define the observation point. For formal reporting, document the block height or a precise timestamp.

  5. Beware of allowances. Seeing an allowance does not mean your USD1 stablecoins have left your address. An allowance authorizes a spender up to a ceiling but does not move tokens by itself. The actual transfer appears only when a transaction executes.

Decimals, rounding, and unit displays

Most ERC‑20‑style tokens define a decimals value that tells wallets how to format balances. A contract that uses 6 decimals means the integer value on-chain is scaled by 10^6 for human display. If a wallet shows “1.000001,” the underlying integer is 1,000,001 with decimals = 6. Token standards document these conventions so that explorers and wallets format the same number consistently. [1]

Practical tips:

  • When exporting balances to spreadsheets, store both the integer and the human‑readable quantity, and document the decimals value used for each token.
  • During reconciliation, apply the same scaling consistently across systems.
  • When rounding for presentation, document the rule you apply and keep the unrounded figures in working papers.

Reconciliation across wallets and platforms

Reconciliation is the process of comparing records from different systems and resolving differences. For USD1 stablecoins, an efficient reconciliation workflow generally includes:

  1. Inventory of addresses and accounts: list every self‑custody address, every custodial sub‑account, and each exchange account that might hold USD1 stablecoins. Label the chain and the token contract for each address.

  2. On-chain snapshots: for each address, capture the token balance at a documented point in time. Save the explorer URL, the token contract, the block height, and a screenshot or hash if your controls require it.

  3. Custodial and exchange statements: download official statements covering the same time window. If the platform provides programmatic balance exports, retain the file hashes.

  4. Movement roll-forward: starting from the prior reconciled position, add verified inbound transfers and subtract outbound transfers to arrive at the expected figure. Differences should then equal fees, exchange fills, or rounding adjustments.

  5. Bridge awareness: if you bridge USD1 stablecoins, distinguish between burns and mints across chains. Avoid double counting the same economic unit. A wrapped token on chain B may represent a claim on locked tokens on chain A.

  6. Cutoff discipline: define a reporting cutoff and post any late‑arriving entries into the next period. Do not adjust history ad hoc; instead, record timing differences with documentation.

  7. Third‑party attestations: where available, align your reconciliation date with the latest attestation dates and confirm that the token contract you track matches the attested supply.

Proof-of-reserves, attestations, and what they do and do not prove

Proof‑of‑reserves (a procedure used by platforms or issuers to demonstrate that they hold assets backing user liabilities or tokens) can increase transparency but requires careful reading:

  • Scope: does the attestation cover USD1 stablecoins reserve assets, user liabilities, or both?
  • Timing: many reports are point‑in‑time; they do not promise continuous coverage.
  • Standards and practitioner: reputable reports cite applicable attestation standards (for example, the American Institute of CPAs attestation framework) and identify the practitioner. [2]
  • Method: some reports use cryptographic methods to allow users to verify inclusion in liabilities without revealing identities; others are aggregate-only.
  • Limitations: proof‑of‑reserves does not guarantee future solvency and may not detect off‑balance‑sheet risks.

New professional criteria released in 2025 provide a more consistent set of benchmarks for what stablecoin reporting should disclose, including clarity around the availability of reserve assets and the definition of redemption rights. [2]

Bottom line: treat proof‑of‑reserves and monthly or quarterly attestations as inputs to a risk assessment, not a sole basis for trust.

Financial reporting: U.S. GAAP and IFRS

Under U.S. GAAP (FASB ASU 2023‑08)

In 2023, the Financial Accounting Standards Board issued ASU 2023‑08, creating Subtopic 350‑60 for certain crypto assets. For in‑scope holdings, entities measure at fair value with changes flowing through net income, and provide enhanced disclosures such as the name, cost basis, number of units, and restrictions. The standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted in some circumstances. [3]

Practical note for USD1 stablecoins: if your holding meets the ASU scope criteria, you will typically present at fair value. For a token designed to be redeemed one-to-one for U.S. dollars, fair value will often approximate par, but measurement still occurs at fair value on each reporting date, with any deviation recorded in earnings.

IFRS context

Under IFRS, the IFRS Interpretations Committee concluded in 2019 that many cryptographic holdings are intangible assets unless held for sale in the ordinary course of business, in which case they can be inventory measured under IAS 2. Management must consider the facts, including how the asset is used and held. [4]

Cross‑framework takeaway: whether you report under U.S. GAAP or IFRS, document your policy for measuring USD1 stablecoins, the controls supporting completeness and accuracy, and your approach to presentation and disclosure.

Custody and safeguarding

In the United States, the SEC in 2025 rescinded Staff Accounting Bulletin 121 and replaced it with SAB 122. SAB 121 had required certain entities safeguarding digital assets for platform users to record a liability and corresponding asset. The rescission changes financial statement presentation for some custodians, subject to transition guidance. Always verify current SEC staff guidance if you are a public filer. [5]

Compliance checkpoints: KYC, AML, and sanctions

Bank Secrecy Act obligations through FinCEN

FinCEN’s 2019 interpretive guidance consolidates how existing money services business regulations apply to convertible virtual currency activity. Depending on the business model, exchangers and administrators can be money transmitters with registration, program, and recordkeeping duties under the Bank Secrecy Act. [6] If your organization moves USD1 stablecoins as a business, analyze whether you are a money transmitter or fit another regulated category and implement risk‑based controls accordingly.

Sanctions compliance through OFAC

OFAC’s sanctions compliance guidance for the virtual currency sector explains that sanctions obligations apply to virtual currency transactions as they do to fiat. The document emphasizes strict liability, reporting of blocked property within ten business days, screening practices, and the importance of risk‑based programs. [7] If your process touches USD1 stablecoins in any way, sanctions screening and controls are essential.

Practical checklist:

  • Identify exposure points: onboarding, withdrawals, counterparties, and on‑chain transfers.
  • Screen names, addresses, and where feasible transaction metadata against sanctions lists and red flags; adopt geolocation and IP risk controls.
  • Establish recordkeeping and timely reporting procedures, including how to handle blocked virtual currency.

Regulatory landscape in the United States and New York

The federal framework: the GENIUS Act (Public Law 119‑27)

On July 18, 2025, the United States enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act), creating a federal framework for payment stablecoins. The law requires permitted issuers to maintain identifiable reserves backing outstanding coins on at least a one‑to‑one basis, with allowable items including cash, balances at Federal Reserve Banks, demand deposits at insured depository institutions subject to safeguards, and specified high‑quality liquid assets such as Treasury instruments. The statute also addresses redemptions, disclosures, consumer protections, and priority of claims to required reserves in an issuer insolvency. [8]

A few practical highlights for readers focused on balances:

  • 1:1 reserves and redeemability: core pillars of the framework, shaping how issuers manage liquidity and how users interpret par‑value claims. [8]
  • Issuer categories and oversight: the law defines permitted issuer types, including federally supervised nonbank issuers and subsidiaries of insured depository institutions, and sets supervisory lanes. [8]
  • Preemption for certain federal issuers: for federally qualified permitted issuers approved under the law, the framework preempts some state licensing requirements, while preserving state roles for others. [8]
  • Effective date: the statute takes effect on the earlier of 18 months after enactment or 120 days after final implementing regulations by the primary federal payment stablecoin regulators. As of October 31, 2025, rulemaking and guidance are in progress; check Treasury and prudential regulator notices for updates. [8][9]

New York’s supervisory approach

Before the federal framework, New York’s Department of Financial Services issued stablecoin guidance that remains influential. The DFS guidance requires fully backed reserves whose market value at least equals outstanding supply at each business‑day end, clear redemption policies targeting par redemptions within two business days for compliant requests, and monthly independent CPA attestations plus annual internal‑control attestations. It also prescribes reserve asset quality and segregation. [10]

New York continues to publish virtual currency supervision resources, including listings and a Greenlist process. If you operate in or serve New Yorkers, ensure your USD1 stablecoins policies align with DFS expectations in addition to any applicable federal rules. [11]

Risk mapping: technology, operations, and market structure

Understanding where variances arise will help you manage balances for USD1 stablecoins confidently:

  1. Chain risk: network upgrades, congestion, or reorgs can delay finality. When taking formal snapshots, document block height and allow a buffer for confirmations suitable for the chain’s consensus design.

  2. Bridge risk: wrapped representations depend on smart contracts and custodians. If a bridge halts, bridged tokens can become illiquid even when the underlying supply remains intact. Track which portion of your exposure is native versus bridged on each network.

  3. Counterparty risk: custodians and exchanges mitigate risk through controls, but no control eliminates it. Read assurance reports critically, including scope, timing, and practitioner independence.

  4. Liquidity risk: even with par redemption commitments, channels can clog during stress. For mission‑critical balances, maintain diversified access: multiple issuers when permitted, multiple chains, and settlement options across platforms.

  5. Operational risk: access controls, multi‑approval flows, and separation of duties are essential. Phishing, social engineering, and mis‑sent transfers remain among the most common causes of loss.

  6. Legal and policy risk: the GENIUS Act sets national guardrails, while regulators refine implementation. Expect further rulemaking on disclosures, reserve composition details, wallet requirements, and supervisory coordination. [9]

Frequently asked questions

Q: Are my USD1 stablecoins “stored” in my wallet?
A: The tokens are recorded on a blockchain ledger. Your wallet holds keys that authorize transfers. If you self‑custody, you control the keys; if you use a custodian or exchange, they control keys on your behalf through contractual arrangements.

Q: Why does my wallet show a number different from the explorer?
A: Ensure you are looking at the same chain and token contract, and the same observation time. Wallets and explorers can have caching or indexing delays; explorers often let you refresh or jump to a block height to verify.

Q: How do I avoid double counting across chains?
A: Treat bridged tokens as representations. Do not sum native and wrapped supplies as if they were distinct economic units. For your own holdings, track source and destination alongside the bridge transaction.

Q: How does U.S. federal law now protect users of payment stablecoins?
A: The GENIUS Act requires one‑to‑one backing, governs reserve types, sets issuer categories and oversight, clarifies redemption expectations, and prioritizes claims to required reserves in an issuer insolvency. It also launches rulemaking to fill in technical details. [8][9]

Q: Do proof‑of‑reserves reports make my USD1 stablecoins risk‑free?
A: No. They provide assurance at points in time and can raise confidence, but do not eliminate technology, liquidity, operational, or legal risks.

Q: How are USD1 stablecoins measured in financial statements?
A: Under U.S. GAAP ASU 2023‑08, in‑scope holdings are measured at fair value with changes in earnings, with expanded disclosures. IFRS typically treats such holdings as intangible assets unless held for sale in the ordinary course of business. [3][4]

Q: What sanctions rules apply?
A: OFAC’s sanctions framework applies to virtual currency transactions, with strict liability in many cases and specific reporting and recordkeeping requirements. Implement screening and blocking procedures. [7]

Glossary

  • Address: an alphanumeric identifier used to receive or hold tokens.
  • Attestation: an independent practitioner’s report providing assurance on a subject matter (for example, reserve backing), following recognized standards.
  • Block explorer: a tool that displays transactions, addresses, and token data for a blockchain.
  • Bridge: software and contracts that enable value to move between chains, usually by locking on one chain and minting a representation on another.
  • Custodian: a regulated firm that safekeeps keys and operates controls to protect assets on behalf of clients.
  • Decimals: a token parameter that defines how many fractional units are displayed relative to the smallest integer unit.
  • ERC‑20: a widely adopted token interface on EVM‑compatible chains that standardizes functions like balanceOf, transfer, and allowances. [1]
  • Finality: the point after which a transaction is practically irreversible on a blockchain.
  • KYC: “know your customer” processes that verify identity and assess risk.
  • Money transmitter: a category under the Bank Secrecy Act that includes certain exchangers and administrators of virtual currency. [6]
  • Proof‑of‑reserves: a method to demonstrate that assets held match liabilities or outstanding tokens, subject to scope and timing limitations.
  • Redemption: exchanging tokens for U.S. dollars with the issuer under stated policies.
  • Reserve assets: cash and other high‑quality liquid assets that back outstanding tokens, as specified by law or supervisory guidance. [8][10]
  • Self‑custody: holding and controlling your own private keys.

Sources

  1. ERC‑20 Token Standard — Ethereum Improvement Proposal 20 (specification for token interfaces, including balanceOf and allowances). eips.ethereum.org. [1]
  2. AICPA and CIMA — “AICPA Publishes Comprehensive Criteria for Reporting on Stablecoins” (Mar 6, 2025), describing criteria for issuer reporting and assurance. aicpa-cima.com. [2]
  3. FASB — Accounting Standards Update 2023‑08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350‑60): Accounting for and Disclosure of Crypto Assets; effective for fiscal years beginning after Dec 15, 2024. Accessible PDF mirror. storage.fasb.org. [3]
  4. IFRS Interpretations Committee — Holdings of Cryptocurrencies—June 2019 agenda decision, clarifying IFRS treatment for many crypto holdings. ifrs.org. [4]
  5. SEC — Staff Accounting Bulletin No. 121 (rescinded by SAB 122 in Jan 2025), background on prior custodial accounting treatment. sec.gov. [5]
  6. FinCEN — FIN‑2019‑G001, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (May 9, 2019). fincen.gov. [6]
  7. OFAC — Sanctions Compliance Guidance for the Virtual Currency Industry (Sept 2021), including strict liability, reporting timelines, and best practices. ofac.treasury.gov. [7]
  8. Congress.gov — GENIUS Act (Public Law 119‑27), including issuer categories, 1:1 reserve mandate, redemption and reserve priority, and effective date. congress.gov. [8]
  9. U.S. Treasury — Press release and early rulemaking notice on implementing the GENIUS Act; agencies soliciting comments on standards, disclosures, and reserves. home.treasury.gov. [9]
  10. New York DFS — Guidance on the Issuance of U.S. Dollar‑Backed Stablecoins (June 8, 2022): fully backed reserves, T+2 redemption expectation, monthly CPA attestations, and annual internal‑control attestation. dfs.ny.gov. [10]
  11. New York DFS — Virtual Currency Business Licensing hub, including industry letters and Greenlist information relevant to coins available for regulated entities. dfs.ny.gov. [11]