TLDR
- NYDIG has raised concerns about the lack of proper reserve reporting for the USD1 stablecoin.
- The last reserve update for USD1 was in July while competitors like Circle report monthly.
- BitGo Technologies manages USD1 issuance and reserves but does not meet future regulatory standards.
- The GENIUS Act will bar BitGo from issuing stablecoins when it takes effect in January 2027.
- Over 78% of USD1 tokens are held in offshore wallets mostly linked to foreign exchanges.
The New York Digital Investment Group (NYDIG) raised red flags about the USD1 stablecoin. Their report raises concerns about reserve transparency, offshore holdings, and compliance gaps ahead of regulatory changes. The token, linked to the Trump family, faces growing scrutiny as analysts uncover operational control by BitGo Technologies.
USD1 Reserves Lack Transparency
NYDIG criticized the reserve reporting of USD1, stating that no updates have been issued since July 2025. In contrast, Circle reports monthly and Tether releases data quarterly, but USD1 missed its semi-annual schedule. “USD1 reserves reporting is below the industry standard,” said the NYDIG report.
Though World Liberty Financial (WLF) owns the USD1 brand, BitGo handles issuance, redemption, and reserve operations. BitGo is licensed as a money transmitter but lacks the status required under the GENIUS Act. The Act, effective from January 2027, mandates issuers be federally or state-qualified institutions.
NYDIG warns that BitGo will not qualify as an issuer once the GENIUS Act takes effect. Consequently, USD1’s structure must change to remain legal. “The project needs structural adjustment to comply with the law,” the report noted.
Offshore Holdings and Binance Ties Raise Red Flags
NYDIG revealed that 78% of USD1 tokens are stored in offshore wallets, mostly tied to foreign crypto exchanges. Analysts noted that Binance wallets held 90% of all USD1 tokens as of July 2025. That share has since declined, but the majority of USD1 reserves remain outside the U.S.
Bloomberg previously reported that Binance helped build the USD1 smart contract. The report also linked a $2 billion investment in USD1 to MGX, a UAE-based group. Binance’s founder, Changpeng Zhao, denied involvement, calling the report “disinformation.”
Still, NYDIG questioned why a U.S.-linked stablecoin is so dependent on foreign platforms. Some tokens have been redeemed, but a portion went to unknown addresses. The report flagged this as a concern for regulatory oversight and stability of USD1 reserves.
Policy Contradictions and Ambitious Asset Tokenization Plans
WLF promotes USD1 as part of a global “dollarization mission,” calling it a patriotic move. NYDIG acknowledges this but notes a contradiction in economic policy. While Trump supports the dollar globally, he has also advocated for a weaker USD to boost exports.
The company plans to tokenize real-world assets (RWAs) and pair them with USD 1. Analysts view this as a bold move targeting both the $2 trillion stablecoin market and the $257 trillion securities market. However, regulatory concerns and offshore holdings could pose significant risks.
NYDIG emphasizes the need for more transparent reserve reporting and legal compliance. USD1 reserves must become transparent and fully auditable. Until then, concerns around governance and jurisdiction will likely persist.
