Stablecoin
What is a stablecoin?
Stablecoin is a crypto-asset designed to hold a stable value by referencing a fiat currency, such as the US dollar or the euro, and backed by reserve assets held by its issuer. Holders transfer stablecoins on a blockchain and can redeem them with the issuer for the referenced currency, subject to the issuer's terms and applicable regulation.
The value of most isn't tied to any reference asset. A fiat-referenced stablecoin is issued when the issuer receives currency and removed from circulation when it's redeemed, a model designed so that tokens in circulation are backed by reserves the issuer holds. USDC (referencing the US dollar) and EURC (referencing the euro) are examples. For businesses, stablecoins act as a settlement asset and payment method that moves on public blockchains, outside card scheme and bank transfer rails.
Key facts
- Also known as: fiat-referenced token. Under EU law, a stablecoin referencing a single official currency is an e-money token (EMT).
- Examples: USDC (US dollar) and EURC (euro).
- Backing: reserve assets held by the issuer, such as cash deposits and short-term government securities. Reserve composition and disclosure rules depend on the issuer's jurisdiction.
- EU framework: the Markets in Crypto-Assets Regulation (), Regulation (EU) 2023/1114. Its stablecoin provisions have applied since 30 June 2024 and require EMT issuers to be authorised as a credit institution or an electronic money institution.
- US framework: the GENIUS Act, signed into law on 18 July 2025, which requires payment stablecoins to be backed by reserves on at least a one-to-one basis.
- Transfer model: the payer initiates every transfer from their wallet, which makes stablecoin payments a form of .
Why it matters
- Settlement timing: blockchain networks run continuously, so a transfer isn't held until the next banking day or cut-off time. This changes how and treasury planning work for businesses that receive funds on weekends or across time zones.
- Cross-border flows: a stablecoin transfer moves directly between two wallet addresses instead of passing through a chain of correspondent banks. Businesses that send international in USDC or EURC still face a when the recipient converts to a local currency.
- Record matching: each on-chain transfer carries a unique transaction hash recorded on a public , which finance teams match to invoices or orders during .
- Compliance obligations: providers that offer stablecoin services run checks on business clients, checks where required, and screen wallet addresses as part of controls. Under MiCA, crypto-asset service providers in the EU need authorisation to offer these services.
- Finality: a confirmed transfer can't be reversed at network level. There's no process, so a is a new outbound transfer, and funds sent to a wrong address aren't recoverable through the network.
Types
Stablecoins are grouped by the mechanism that keeps their value stable:
- Fiat-referenced: pegged to one official currency and backed by reserves in that currency or equivalent liquid assets. USDC and EURC fall into this group, which MiCA classifies as e-money tokens.
- Asset-referenced: value references a basket of assets, such as several currencies or a commodity. MiCA treats these as asset-referenced tokens (ARTs), with a separate authorisation and reserve regime.
- Algorithmic: target a stable value through supply rules rather than reserve assets. Without reserves backing redemption, they fall outside the stablecoin categories defined in MiCA and the GENIUS Act.
How it compares
| Payment type | Value reference | Reversal mechanism | Operating hours |
| Stablecoin | Fiat currency, backed by issuer reserves | None at network level; refund is a new transfer | Network runs continuously |
| No reference asset | None at network level | Network runs continuously | |
| Card payment | Fiat currency | Chargeback through the card scheme | Settles on acquirer and scheme schedules |