Definition: stablecoin

A cryptocurrency whereby each coin is backed by something of value. Stablecoins are a digital currency that has the worldwide transfer attributes of Bitcoin without the price fluctuation. For example, one token of an asset-backed stablecoin such as Digix (DGX) or OneGram (OGC) equals one gram of gold. Fiat-backed stablecoins such as USDT and USDC are pegged to the U.S. dollar.

Because stablecoins are crypto, they can be transferred to any crypto wallet or exchange, and popular stablecoins are widely supported. Investors, traders and arbitrageurs use them for temporary cash (see crypto trading pair).

As of September 2025, the following stablecoins have market caps of one billion dollars and greater (see Tether, USDC and USD1).

                 Market Cap
             (rounded up/down
            to nearest billion)   Price

     USDT (Tether)   $173        $1.0

     USDC            $ 72        $0.9999

     USDS            $  8        $1.0

     Dai             $  5        $1.0

     USD1            $  2        $1.002

     PayPal USD      $  1        $0.9988

Stablecoins Are Having Their Heyday
Since the Trump administration's stance became pro-crypto, banks in America are figuring out how to issue stablecoins and collect fees. In fact, along with partners, the Trump family launched their own stablecoin in 2025, and it became the fastest growing stablecoin on the market (USD1 above). See GENIUS Act and World Liberty Financial.

Because stablecoins provide a global money exchange with lower fees than typical bank transfers, there is a lot of incentive worldwide. They also provide execution in minutes or even seconds compared with one to five business days for traditional international transfers.

A New Way to Profit
Stablecoins offer a relatively new product for private companies, because not only do they collect fees for minting and transferring stablecoins, they invest the cash they receive and earn interest forever. Although it is a complicated process for companies to set up and market stablecoins, once established, they keep money flowing by ensuring that their stablecoins maintain their value.

The Privacy Advantage
Keeping financial transactions private is another advantage. Stablecoins offer a private banking alternative, and naturally, thieves welcome this option.

Two Approaches to Stability
The first is a "reserved" or "regular" stablecoin, which is backed by dollars, Euros or precious metals. Stablecoin issuers can also invest in commercial paper, secured loans and even fluctuating assets such as other crypto tokens. Known as "algorithmic" stablecoins. If the stablecoin/token ratio goes out of balance, either stablecoins or tokens are added or destroyed ("burned") to maintain equilibrium. However, if the algorithm is matched with the wrong token, things can fall apart (see TerraUSD). See DAI, Tether, Gemini Trust, USDC, Diem and crypto burning.