Segregated assets
Reserves held in a way that legally insulates them from issuer-corporate creditors in bankruptcy.
Trust-chartered issuers (Paxos, Gemini) hold reserves in legally segregated trust accounts. Other structures use bankruptcy-remote SPVs. The recurring failure mode is "commingled" reserves — Tether's historical disclosures evolved on this point under NYAG settlement.
Related terms
- Trust charterA NYDFS authorisation under NY Banking Law allowing the holder to act as a trust company for crypto assets.
- ReservesThe assets backing a stablecoin's outstanding liabilities — for fiat-backed stables, predominantly cash + Treasuries.
- Custody riskThe risk a custodian (bank, exchange, qualified custodian) loses, mismanages, or is denied access to reserves it holds.