Definition

No single legal definition of a stablecoin exists — every jurisdiction frames it differently. The Financial Stability Board (FSB) describes a stablecoin as a cryptoasset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets. The Bank for International Settlements (BIS), in its 2025 report, defines stablecoins as crypto tokens on decentralised ledgers that promise to always be worth a fixed amount in fiat currency — typically one dollar — most issued by a single central entity holding reserves that back the circulating token supply.

The US GENIUS Act (signed into law on July 18, 2025) defines a "payment stablecoin": a digital asset issued for payment or settlement that the issuer is obligated to redeem at a fixed monetary value, such as one dollar. The EU's MiCA regulation does not use the word "stablecoin" in its legal text at all; instead it defines two categories — e-money tokens (EMTs), referencing a single official currency and treated as electronic money redeemable at par, and asset-referenced tokens (ARTs), referencing a basket of currencies, commodities, or crypto assets.

Why stablecoins exist

The main use cases are payments and settlement, collateral for trading and lending in DeFi, cross-border transfers, and dollar access in countries with unstable local currencies or limited banking access.

  • Traditional remittance channels take days and charge 5–10% in fees; eight of the top ten remittance-receiving countries are emerging markets — stablecoins offer a near-instant, lower-cost cross-border alternative.
  • BIS estimates that by 2026 about 99.4% of fiat-backed stablecoins were pegged to the US dollar; 2025 annual transaction volume was estimated at roughly $28 trillion — still under three weeks of US wholesale settlement volume.

Stablecoin vs. a volatile crypto asset

Bitcoin, ether, and most other crypto assets have no target price — value is set freely by supply and demand. A stablecoin, by contrast, is designed to keep deviation from its target as small as possible; the mechanism that holds the price — issuance, redemption, reserves, or collateral — is covered in "How the Peg Mechanism Works."

Stablecoin vs. a CBDC

A central bank digital currency (CBDC) is a direct liability of the central bank — a digital form of the sovereign currency itself. A stablecoin is a private issuer's liability, backed by its reserves or collateral, not a direct state issuance. BIS argues that stablecoins as a class fail the "singleness" test (par acceptance with no questions asked) and the "elasticity" test of money supply — properties that settlement in central bank money delivers.

Market scale

Market trackers put total stablecoin market capitalization at roughly $301.7 billion on September 3, 2026, with USDT accounting for about 63% ($183.4 billion) and USDC for about 25.5% ($74.2 billion). BIS's 2026 report estimated total stablecoin supply at close to $320 billion at the end of May 2026 — up from about $27 billion at the end of 2020.