Issuer & counterparty concentration
Regulation & issuerHow much of the reserve, custody or redemption pipeline depends on a single bank, custodian or jurisdiction.
Concentration is the risk that converts a healthy reserve into a frozen one. A single banking partner, a single custodian, or a single jurisdiction able to freeze accounts is a single point of failure regardless of asset quality.
Diversified custody across multiple regulated institutions and jurisdictions is a meaningful, if unglamorous, safety feature.
Why it matters
Most historical stablecoin failures were counterparty events, not asset-quality events.
Related terms
What the issuer actually holds against outstanding tokens: T-bills, overnight repo, bank deposits, commercial paper, crypto collateral, or a mix.
Whether reserve assets are legally segregated from the issuer's estate, so holders are paid ahead of general creditors if the issuer fails.
Which regime the issuer operates under — for example EU MiCA e-money tokens, a NYDFS trust charter, or a Singapore/UAE licence — and the reserve, reporting and redemption duties that come with it.