How BIS classifies stablecoins
In its 2025 report, BIS identifies three main stablecoin variants by backing: short-term fiat assets, crypto collateral, and algorithmic arrangements — and notes the market today is overwhelmingly the fiat-backed model (USDT, USDC).
| Type | Example | Backing | Main risk |
|---|---|---|---|
| Fiat-backed (fully reserved) | USDT, USDC | Cash, Treasury bills, overnight reverse repo | Loss of access to reserves via a banking partner |
| Crypto-backed (over-collateralized) | DAI / USDS (Sky) | Crypto assets in excess of the issued amount | Collateral value falling faster than liquidation |
| Algorithmic / synthetic | UST (failed) / USDe (Ethena) | No direct collateral (UST) or derivatives hedge (USDe) | Loss of market confidence / funding cost |
| Commodity-backed | PAXG, XAUT | Physical commodity (gold) in vault storage | Custody, audit, liquidity of the physical asset |
| Tokenized deposits | JPMD (JPMorgan) | A bank deposit on the bank's own balance sheet | Formally not a public stablecoin but a bank liability |
Fiat-backed
The canonical examples are USDT (Tether, launched 2014) and USDC (Circle, launched 2018): reserves are held in cash, Treasury bills, and overnight reverse repo, with at-par redemption available to authorized institutional accounts. Reserve structure is covered in more detail in "How the Peg Mechanism Works."
Crypto-backed (over-collateralized)
The canonical example is DAI/USDS from Sky (formerly MakerDAO): crypto-asset collateral sits on the protocol's balance sheet at a ratio above 100%, with automatic liquidation triggered if its value falls too far.
Algorithmic and synthetic — two different approaches
It is worth separating purely algorithmic designs with no direct collateral — Terra's UST, which failed catastrophically in May 2022, is the example — from delta-neutral "synthetic dollars" such as Ethena's USDe: crypto-asset collateral is hedged with an offsetting derivatives position, so the design is neither under-collateralized in the UST sense nor simply backed by fiat reserves.
Commodity-backed
Examples are PAX Gold (PAXG, issued by Paxos, regulated by the New York State Department of Financial Services, one token equals one troy ounce of gold) and Tether Gold (XAUT, gold held in Swiss vaults). The combined tokenized gold market topped $2.5–2.9 billion in 2025–2026, with PAXG and XAUT together accounting for about 96.7% of it.
Tokenized deposits are not a stablecoin
A deposit token such as JPMorgan's JPM Coin/JPMD is a digital claim on a real bank deposit that stays on the bank's own balance sheet; legally it is a bank deposit, not an issuer's redemption promise the way a stablecoin is. Regulators and market participants explicitly distinguish deposit tokens from stablecoins on this basis.
EU regulatory split: EMT and ART
MiCA does not use the word "stablecoin": the law defines an EMT category (e-money tokens referencing a single official currency — the category USDT- and USDC-style tokens fall into) and an ART category (asset-referenced tokens — a basket of currencies, commodities, or crypto assets, which covers both commodity-backed designs and multi-asset models).
Yield and status in the US
The GENIUS Act explicitly bars "payment stablecoin" issuers from paying holders interest or yield "solely in connection with" holding the token. As of late 2025, it remained contested whether the ban extends to affiliates and third parties offering reward programs tied to stablecoin holdings: the US Office of the Comptroller of the Currency (OCC) proposed rules to close that gap by extending the ban to affiliates and third parties, but based on available sources this remained a proposed rule, not settled law. Because the ban applies specifically to "payment stablecoins" as the Act defines them, products structured as fund shares — such as tokenized money-market funds — formally sit outside that definition and can pay yield; as of September 2026 this area of regulation is still taking shape.