Stablecoin
A stablecoin is a cryptocurrency whose value is pegged to a reference (usually USD or EUR) to eliminate price volatility without giving up blockchain's technological advantages.
Stablecoins come in three flavours: fiat-backed (USDT, USDC: 1 token = 1 USD on a bank account), crypto-backed (DAI: overcollateralised with crypto), and algorithmic (UST — collapsed in 2022, out of favour after the LUNA crash). Total market cap >$200 billion in 2026. Under MiCA the EU has an ART/EMT regime regulating stablecoin issuers strictly: the EU Commission is concerned about 'systemic stablecoins' affecting financial stability. USDC popular with compliance-focused parties; USDT dominant by volume.
Example
A crypto trader converts $100,000 USDC via Ethereum to a DEX, trades 24/7 without a bank, settles within minutes. Back to USD? $100,000 ± fees — stable value, crypto speed.
Frequently asked questions
USDT, USDC or DAI?
USDC: best regulated, Circle (USA), transparent. USDT: most liquidity, Tether, less transparent. DAI: on-chain, decentralised, less bank-dependent. Choice = trade-off risk vs functionality.
Impact of MiCA on stablecoins?
Since June 2024 EMT/ART issuers must be authorised, hold reserves (100% backing), publish transparency reports. Non-compliant stablecoins (like original USDT) delisted on EU exchanges.
Related terms
Further reading
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