Reserve transparency is the disclosure of information that allows users, regulators, and other stakeholders to evaluate the assets supporting a reserve-backed stablecoin.
Useful reserve disclosure can include the total value of reserves, asset composition, maturity profile, custodians, concentration, valuation method, frequency of reporting, and the relationship between reserves and outstanding stablecoin liabilities. Disclosure can be supported by issuer reports, independent assurance, audited financial statements, or regulatory filings. Transparency improves the information available to the market, although its effect on run risk depends on what the disclosed information reveals about reserve quality.
Transparency describes the information made available. Attestation and audit describe specific forms of independent assurance and can differ substantially in scope.
Reserve disclosure helps users assess liquidity, credit quality, maturity mismatch, and the issuer's capacity to meet redemptions.
An issuer may publish monthly reserve composition by asset class together with an independent assurance report on the reported balances.