Stablecoin
A stablecoin is a crypto token designed to keep a fixed value against an ordinary currency, almost always the US dollar. That value rests on reserves held by the issuer. The Bank for International Settlements (BIS) notes stablecoins often trade away from their fixed value.
How does a stablecoin keep its value?
The BIS describes stablecoins as tokens on decentralised ledgers that promise to always be worth a fixed amount of fiat currency. Most are issued by a single central company. That company holds a pool of reserve assets, and the stability promise is only as strong as those reserves and the holders' belief that coins can be swapped back at face value.
The BIS also asks whether stablecoins work as money at all. Its answer is in the risks section below.
How big is the stablecoin market?
The European Central Bank (ECB) put the combined value of all stablecoins above USD 280 billion in its November 2025 Financial Stability Review. Two tokens dominate: Tether (USDT) at USD 184 billion, about 63%, and USD Coin (USDC) at USD 75 billion, about 26%. Around 99% of supply is dollar-denominated. Euro stablecoins totalled only about €395 million.
What does it mean when a stablecoin de-pegs?
A de-peg is when the token trades meaningfully below its target, for example under one dollar for a dollar coin. The ECB describes the mechanism: if investors lose confidence that coins can be redeemed at par, that loss of faith can trigger a run, with many holders trying to exit at once.
What are the risks of holding a stablecoin?
The BIS tests money on three criteria and says stablecoins fall short on all of them:
- Singleness: they often trade at varying rates, with substantial deviations from par.
- Elasticity: every new coin must be paid for in full upfront by its holder.
- Integrity: as pseudonymous bearer instruments on public blockchains, they attract illicit use.
A stable price target also says nothing about whether the person or platform you are dealing with is genuine. Check our crypto scam red flags before sending any coin.
Frequently asked questions
Is a stablecoin always worth exactly $1?
No. The BIS records substantial deviations from par, and the ECB explains how a loss of confidence can push the price down.
Is a stablecoin the same as money in a bank?
No. Its value rests on a private issuer's reserves, and the BIS says it fails the singleness and elasticity tests that bank money meets.
Sources
- BIS Annual Economic Report 2025, Chapter III: The next-generation monetary and financial system — bis.org (accessed 2026-10-02)
- ECB Financial Stability Review, Stablecoins on the rise (Nov 2025) — ecb.europa.eu (accessed 2026-10-02)