Non-Fiat Reserves

Definition ∞ Non-fiat reserves are assets held by an entity that are not government-issued currency, such as gold, commodities, or other cryptocurrencies. In the digital asset domain, this typically refers to stablecoins or blockchain projects holding a portion of their treasury in other digital assets or physical assets. These reserves serve to back stablecoins, provide liquidity, or diversify a project’s holdings. They offer an alternative to traditional fiat-backed financial structures.
Context ∞ News often highlights non-fiat reserves in discussions about stablecoin backing and the decentralization of financial systems. The composition and auditability of these reserves are critical for maintaining confidence in stablecoins not pegged to fiat currency. Regulatory bodies are increasingly scrutinizing the transparency and risk management practices associated with non-fiat reserves. Debates frequently concern the stability and liquidity of these alternative reserve assets, impacting market trust.