Stablecoins, explained
The 'digital dollars' that keep crypto running — and why regulators watch them.
A stablecoin is a cryptocurrency designed to hold a steady value — almost always one US dollar. Unlike Bitcoin, whose price swings wildly, a stablecoin aims to always be worth about $1, which makes it useful as a kind of digital cash inside the crypto world. The biggest are Tether (USDT) and USD Coin (USDC).
Why they exist
Traders use stablecoins to move money between exchanges quickly, to park funds without cashing out to a bank, and to trade around the clock. Most are meant to be 'backed' by real reserves — dollars, government bonds or similar assets — held by the issuer, so each coin can in theory be redeemed for a real dollar.
The risks
Stablecoins are only as trustworthy as the reserves behind them. If an issuer does not actually hold enough safe assets, the coin can 'de-peg' and fall below $1 — as happened dramatically when the TerraUSD project collapsed in 2022. This is why regulators are increasingly demanding transparency and audits. Nothing on this site is financial advice. See our glossary for more terms.