A Bitcoin-focused fintech company, New York Digital Investment Group, raised concerns over the lack of proper reserve reporting by the team behind the stablecoin USD1. Analysts find it odd that a stablecoin launched by the U.S. President’s family is held mostly outside America.
Summary
- NYDIG report points to the USD1’s structure that won’t fit the GENIUS Act requirements once it comes into effect.
- Analysts view the lack of reserve reports by USD1 since July as a huge concern.
- Another problem outlined by NYDIG is USD1’s ties with Binance, as 79% of USD1 stablecoins are based on the BNB blockchain. 78% of USD1 tokens are held offshore in the wallets of foreign exchanges.
Reporting gap and structure issues
USD1 stablecoin is largely known as the project of World Liberty Financial, a company mostly owned by the Trump family. However, NYDIG outlines that while WLF is a brand owner, the tokens are issued and redeemed by BitGo Technologies LLC, a money transmitter licensed with FinCEN. Thus, World Liberty Financial is just a face of the project, while most of the job (reserve management and infrastructure maintenance) is done by BitGo.
It’s an important detail, as BitGo won’t be eligible to do this job as soon as the GENIUS Act takes effect. While the bill was enacted by President Donald Trump on Jul. 18, 2025, it will come into effect only on Jan. 18, 2027, or 18 months after it was signed into law.
Read more: GENIUS Act was signed into law one month ago. What did it change?
The GENIUS Act restricts stablecoin issuance to subsidiaries of insured depository institutions, federal-qualified issuers (the Office of the Comptroller of the Currency-approved nonbanks, uninsured national banks, or federal branches of foreign banks), and state-qualified issuers. As of the press time, BitGo’s legal status doesn’t match any of these categories. NYDIG notes that while it is not an existential threat to USD1, the project needs structural adjustment to comply with the law.
While Donald Trump advocates for semi-annual reporting instead of quarterly reporting for public companies, the stablecoin associated with his family has already adopted this pace. NYDIG found out that USD1 hasn’t been doing reserve reports since July! For comparison, Circle releases reserve attestations on a monthly basis. The latest report was released on Sep. 30. Tether hasn’t released a report since Jun. 30, but the company has been consistent in its once-in-a-quarter reporting pace.
Patriotic mission and offshore holdings
NYDIG analysts’ eye was caught by the fact that most of the USD1 tokens (at least 78%) are held on the offshore wallets. Most of them are the wallets of foreign crypto exchanges. According to the NYDIG report, most USD1 tokens are based on BNB Smart Chain, and there is a probability that the project has ties with Binance.
Aggregating balances across chains, it’s clear that USD1 is overwhelmingly preferred by offshore holders vs onshore. 78% (at a minimum, we only looked at the top addresses) of USD1 tokens are held in wallets associated with offshore entities, such as exchanges. pic.twitter.com/xC9FmkrsVY
— NYDIG (@NYDIG) October 6, 2025
In July, Bloomberg reported that Binance has close ties with USD1. According to the publication, Binance participated in the development of a USD1 smart contract and received a $2 billion investment in USD1 from a UAE-based investment group, MGX. The investment is mentioned in other publications as well. Binance founder Changpeng Zhao denied these allegations, dismissing them as the disinformation spread by a competing exchange.
Read more: Coinbase denies involvement in Bloomberg report linking Binance to USD1 stablecoin
According to Bloomberg, 90% of USD1 was held on Binance wallets as of July. This amount has decreased by the time of the NYDIG report. Analysts from NYDIG suggest that of $2 billion invested in Binance, part of the funds has gone to unknown addresses or was redeemed — the report questions why the U.S. president-linked stablecoin is largely held outside the U.S.
NYDIG mentioned the plans of World Liberty Financial to tokenize real-world assets and pair them with USD1. According to NYDIG, the WLF representatives said that dollarization of the world is a “patriotic mission” and is useful for the world in general.
The company’s striving to explore both tokenized RWAs and the stablecoin space is an ambitious move. The stablecoin market is projected to reach $2 trillion, while the securities market is valued at $257 trillion. Once tokenized, it opens the door for a new giant market.
Distributing USD stablecoins to users outside the US reinforces the dollar’s dominance and solidifies its role as the world’s reserve currency, an invaluable advantage that Washington has arguably leaned on too heavily in the past. On the other hand, this dynamic runs counter to…
— NYDIG (@NYDIG) October 6, 2025
NYDIG analysts point to the ambiguous role of “dollarizing the world” through stablecoins. On the one hand, they see it as reinforcement of the dollar’s role as the world’s reserve currency. On the other hand, they suggest that it goes against Trump’s plans to make the USD weaker to boost exports of US-made products.
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