Stablecoins for Accountants: USDC, USDT, DAI and USDe Explained

A stablecoin is a token built to track a currency, such as the US dollar, but it is not the currency itself. USDC and USDT rest on assets held or invested by a company, DAI and USDS on protocol debt, and USDe on a managed portfolio. Which design a token uses is the first question about stablecoins for accountants.

You will learn the three designs, what mint, burn and redeem mean, who may redeem, who can freeze a balance, and what that means for your books.

Stablecoins for accountants: what are the three designs?

Each design holds the price near one dollar in a different way.

• Fiat-backed: USDC and USDT. A company, the issuer, creates tokens when a customer pays it dollars and destroys them when it pays dollars back. The dollars it receives, and whatever it buys with them, are the reserve. Circle issues USDC and Tether issues USDT.
• Backed by protocol debt: DAI and USDS. No company issued either token. Both come from a set of smart contracts, programs that run on the chain, called the Sky Protocol and once known as the Maker Protocol. Holders of a separate governance token, SKY, vote to change its rules.
• Synthetic: USDe. Ethena BVI Limited issues USDe and holds a portfolio of other assets, which it tries to keep steady in dollar terms. "Synthetic" is the issuer's own word.

All three aim at one dollar, a target called the peg. Circle's USDC Terms say Circle "does not guarantee that the value of one (1) USDC will always equal 1 USD ($1) on other platforms".

What do mint, burn and redeem mean?

Three terms explain how stablecoins are created and cashed in.

• To mint is to create new units. The token contract, which keeps every balance, adds them to an address and to the total supply.
• To burn is to destroy units. The contract takes them off a balance and off the total supply.
• To redeem is to hand units back to the issuer and receive dollars.

Dealing with the issuer directly is called the primary market. Everyone else buys from and sells to other holders.

For USDC, a customer with a Circle Mint account, Circle's account for the customers it deals with directly, wires dollars to Circle. Circle credits the account with USDC one for one. To redeem, the customer sends USDC to an address Circle controls, Circle credits the account, and Circle pays dollars by wire.

The burn comes later, when Circle destroys units from its own balance. The burn record carries nothing that links it to any customer, so it is not the holder's redemption and does not date it. The holder's redemption is the transfer, the credit and the wire, three records in three systems, and only the transfer is on the chain.

USDT works differently. Tether creates new units at its own address and, after redemptions, retires units from its own balance. Neither step writes a Transfer record, the entry a token contract normally writes when tokens move. Software that builds books only from Transfer records misses both.

Who may redeem a stablecoin with its issuer?

Where a token has an issuer, only some holders may deal with it. Everyone else sells to other holders at the market price, so the same token can be a different asset in different hands.

• USDC outside the European Economic Area (EEA). A holder without a Circle Mint account may not redeem with Circle until it opens one. Circle says "Circle Mint is not available to individuals".
• USDC in the EEA. The EU's Markets in Crypto-Assets Regulation (MiCA) gives holders of e-money tokens a claim on the issuer and redemption at par value. Circle's French company redeems USDC for holders established in the EEA. An individual acting outside any trade or business redeems through a deposit address Circle provides, without a Circle Mint account.
• USDT. Tether redeems for holders it has accepted as verified customers, and it reported 819 of them in February 2026. Its fee page sets a 100,000 USD minimum and a fee of the greater of $1,000 or 0.1 per cent.
• USDe. Only Mint Users create and redeem with the issuer. They are holders that have passed identity and anti-money-laundering checks and been whitelisted by Ethena BVI. Every other holder is a Holding User, and Holding Users are not customers of Ethena BVI. Users in the United States are not eligible to become Mint Users.
• DAI and USDS. No company issued them, and no document we found makes anybody owe their holders anything.

The holder-rights guide works through each case.

What stands behind DAI and USDe today?

DAI began as a crypto-collateralised token. A borrower locks crypto in a vault, a borrowing account inside the protocol, and creates DAI against it.

In September 2026, one type of ether vault let ether worth 145 dollars, at the protocol's own price, support at most 100 DAI or USDS of debt. If the collateral falls too far, the protocol sells it at auction to recover the debt. Whoever later buys that DAI owes nothing and has no claim on the vault.

Vaults like this are now a small part of the backing. On 22 September 2026, debt created against crypto locked in the protocol's own contracts was 4.62 per cent of the debt behind DAI and USDS.

The LitePSM, a module that swaps DAI and USDC one for one, carried just under 40 per cent. Credit lines to allocators, projects that draw new USDS and invest it elsewhere, carried almost half. The label describes where DAI came from, not what stands behind it now.

A converter swaps DAI and USDS one for one with no fee. It destroys one token and creates the other, so the holder gives up one asset and receives another.

USDe's issuer holds crypto and opens a matching short position on a derivatives exchange, one that gains when the price falls and loses when it rises. The two sides roughly cancel.

But that hedged crypto is now a minority. Ethena's own dashboard on 22 September 2026 put it at 19.68 per cent of about 4.9 billion dollars of backing. The rest was DeFi lending, other stablecoins, institutional lending and tokenised real-world assets.

Who can freeze or destroy a stablecoin balance?

Control over a balance is a separate question from what backs the token.

• USDC. Circle can freeze an address. A frozen address cannot send or receive USDC, but its balance still reads normally. Circle's policy allows a freeze only in listed cases, such as a security threat to its network or a legal order from a US or French authority or court.
• USDT. Tether can freeze an address too, but a frozen USDT address can still receive. Tether can also destroy a frozen balance. The contract sets it to zero and cuts the total supply, with no Transfer record from the holder.

Circle's reserve report for 31 July 2026 counted 129,764,354 USDC, across all its chains, as access-denied tokens, restricted to comply with a law, regulation or legal order.

USDC's current code has no way to destroy a balance, but Circle's terms reach further than the code. A holder that sends USDC to, or receives it from, a blocked address may, in certain circumstances, forfeit its rights, including the right to redeem USDC for dollars.

Both contracts can also be paused, and the code behind both can be replaced. USDS's code can be replaced too, by addresses its contract authorises. DAI's code cannot.

What does a stablecoin balance mean for the books?

A token balance is a number of tokens at an address, not an amount of reserve assets. What the reserve means for a holder differs by issuer.

Tether says holders are not entitled to any increase in the reserves' value beyond the tokens' face value, less fees. Circle says its stablecoins are structured to give holders absolute beneficial ownership of the reserve assets. It adds that courts have not yet considered how reserves are treated in an issuer's bankruptcy or insolvency.

For DAI and USDS, the debt behind the token can rest on another firm's stablecoin or on lending in the Sky ecosystem. For USDe, the issuer can change the portfolio, and a hedge reduces one price risk without removing counterparty, funding, custody or liquidity risks.

For the books, that means three practical checks.

• Treat a savings or staking wrapper, such as sUSDS for USDS, as a different asset with different rights.
• Check the contract and who controls it on every network the business uses, because a freeze can leave an unspendable balance on screen.
• Test whether the token is a cash equivalent for this holder against IAS 7, paragraph 6, or its US GAAP counterpart.

Key takeaways

• A stablecoin is built to track a dollar, but it is not a dollar. Circle, for one, does not guarantee one-dollar prices on other platforms.
• USDC and USDT rest on a company's reserve, DAI and USDS on protocol debt, and USDe on a managed portfolio that can change.
• Only some holders may redeem with the issuer. Everyone else sells to other holders, so the same token can be a different asset in different hands.
• An issuer's burn on the chain is not your redemption and does not date it.
• Circle and Tether can freeze balances, and Tether can destroy a frozen USDT balance without a Transfer record.

How Tokenbooks helps with stablecoins for accountants

A Tokenbooks portfolio can value USDC and other stablecoins at their daily market close, like any other token, so a depeg shows up in the books. Each stablecoin keeps its own cost-basis lots, so every disposal is measured against its own cost basis.

Savings wrappers are separate assets in the books as well. Yield-bearing wrappers built on the ERC-4626 vault standard, sDAI, sUSDS and sUSDe among them, are detected automatically and valued from their on-chain redemption rate. Redeeming or selling sDAI or sUSDS, or selling sUSDe, is booked as a disposal of the share, measured against the share's own cost basis.

Start with the crypto accounting workflow in Tokenbooks.

More in this series

Accounting Token Anatomy: Stablecoins. This article stands alone, but the series builds in order.

Next (02.2.2): Who Owes a Stablecoin Holder a Dollar? Redemption Rights Explained