Stablecoins: what they are and why regulators are paying attention
1 min readBy Tiggree
Dollar-pegged tokens are now part of the conversation about global payments. Learn how they work and where the risks are.
Stablecoins are tokens designed to hold a stable value, usually one dollar. In most cases, the issuer promises to keep reserves in cash and short-term securities to back that peg.
Why people use them
They let you move dollar value at any hour, without depending on banking hours. That appeals to crypto traders and to companies that make international payments.
The risks
- Reserves: the peg depends on the quality of what the issuer holds.
- Runs: mass redemption requests can break the peg.
- Regulation: rules vary by country and can change.
- Custody: losing access to your wallet can mean losing your funds.
These risks have already played out. In 2022, TerraUSD, an algorithmic stablecoin, lost its peg and collapsed. In 2023, USDC briefly fell below one dollar when part of its reserves was exposed to the failure of Silicon Valley Bank.
In the United States, the GENIUS Act, signed into law in 2025, created a federal framework for payment stablecoins. Before using any token, check who issues it and which rules apply where you live.
Educational content, not investment advice. Consider your own situation before making any financial decision.
Educational content only. Nothing here is investment advice.
