U.S. Treasury and Securities and Exchange Commission officials are examining how the issuers of USDT and USDC hold reserves, according to people familiar with the discussions. The review comes as policymakers weigh whether current disclosures and backing practices are sufficient for the fast-growing stablecoin market.

The focus on reserve quality reflects broader concerns about how dollar-pegged digital tokens could affect markets if confidence in their backing weakens. Regulators are also looking at algorithmic stablecoins, which attempt to maintain their peg through code and market incentives rather than traditional reserve assets.

USDT and USDC are the two largest stablecoins by market value, and both are widely used in crypto trading and payments. Their issuers have repeatedly faced questions about the composition, liquidity and transparency of the assets supporting those tokens.

The policy review underscores a wider push in Washington to set clearer guardrails for digital assets after years of fragmented oversight. Any new rules could shape how stablecoin firms disclose reserves, manage risk and operate in the U.S. market.