Stablecoins

Stablecoins are crypto tokens designed to stay worth $1. They have become the plumbing of the crypto world and now have a federal rulebook in the U.S. Here is how they work and where the risks hide.

How a stablecoin holds $1

The largest stablecoins, like USDT and USDC, are backed by reserves: cash, short-term Treasury bills and similar safe assets. The issuer promises to swap each token for $1. Traders use stablecoins to move money between exchanges and to park cash without leaving crypto.

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