Stablecoin
A stablecoin is a cryptocurrency designed to keep a steady value, usually pegged one-to-one to a currency such as the US dollar.
Stablecoins aim to combine the speed and programmability of crypto with the stability of traditional money. They are widely used for trading on crypto exchanges, moving funds between platforms, international transfers and decentralized finance applications.
Most large stablecoins, such as USDT (Tether) and USDC, are fiat-backed: the issuer says it holds reserves in cash, Treasury bills and similar assets that can be redeemed for one dollar per coin. Other designs are crypto-backed, holding more cryptocurrency than the coins issued, or algorithmic, using code and market incentives to maintain the peg.
Stablecoins are not risk-free. A stablecoin can lose its peg if its reserves are insufficient, if confidence collapses or if its design fails. The algorithmic stablecoin TerraUSD collapsed in May 2022, wiping out tens of billions of dollars in value.
In the US, Congress passed the GENIUS Act in 2025 to set rules for payment stablecoins, including reserve and disclosure requirements. Example: sending 100 USDC transfers a claim on about $100 in reserves.