Finder makes money from featured partners, but editorial opinions are our own.

What is a stablecoin?

Greater stability in a world of volatility.

Holly Jennings's headshot
Lena Borrelli's headshot

By

Holly Jennings

&

Lena Borrelli

Edited by

Matt Miczulski

Reviewed by

Richard Laycock

Updated

Fact checked

Key takeaways

  • Stablecoins are cryptocurrencies designed to maintain a relatively stable value by tracking assets such as the US dollar or gold.
  • Stablecoins use reserves, collateral or other mechanisms to maintain their target value.
  • They’re commonly used for crypto trading, payments, transfers, storing value and decentralized finance (DeFi).
  • Stablecoins aren’t risk-free and can lose their target value or face issuer, reserve, regulatory and other risks.

Stablecoins are cryptocurrencies designed to maintain a relatively stable value by tracking an asset such as the US dollar, euro or gold. Unlike more volatile cryptocurrencies, they’re commonly used for trading, payments, transfers and decentralized finance (DeFi).

Stablecoins use different methods to maintain their value, including fiat or crypto reserves, commodities and other mechanisms. While they’re designed for stability, they can still lose their peg and carry risks.

Great for copy trading

Finder Award
eToro USA LLC Cryptocurrency Trading
eToro logo
Go to site
  • Trade leading cryptocurrencies including BTC and ETH
  • Copy top crypto investors with eToro's innovative CopyTrader
  • Access ready-made portfolios built by eToro experts for instant investment direction

Great for beginners

SoFi Crypto
SoFi logo
Go to site
  • Bank, borrow, invest and trade crypto in one app.
  • Trade 27 major cryptocurrencies, including BTC, ETH, SOL, ADA and XRP.
  • Access 24/7 support through chat, phone and email for troubleshooting and live human assistance.
Important information
DIGITAL ASSETS EXCEPT SOFI EARN (SOFIE) ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Crypto is offered by SoFi Bank, N.A. Cryptocurrency and digital assets are not deposits, involve risk and are not insured by FDIC. Please refer to the SoFi Crypto Account Agreement and SoFi Crypto Risk Disclosure for additional terms and conditions.

Advanced crypto trading

Finder Award
Kraken Pro
Kraken logo
Go to site
  • Buy/sell 170+ cryptocurrencies
  • 24/7 customer support
  • Supports EUR, USD, GBP, CAD, AUD, CHF and JPY

Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.

What is a stablecoin?

A stablecoin is a cryptocurrency designed to maintain a relatively stable value by tracking an asset such as the US dollar, euro or gold. Unlike more volatile cryptocurrencies, stablecoins are commonly used for trading, payments, transfers and decentralized finance (DeFi).

StablecoinsOther cryptocurrencies
Main goalMaintain a stable valueVaries
Typical volatilityRelatively lowOften high
Common usesPayments, transfers, trading and DeFiPayments, investing and blockchain applications

Stability is typically maintained by backing the stablecoin with reserves or using other mechanisms designed to keep its price close to its target value. However, stablecoins can still lose their peg and carry risks.

How do stablecoins work?

Stablecoins are designed to maintain a stable value by tracking an asset, usually a fiat currency such as the US dollar. To support that value, stablecoin issuers may hold reserves such as cash, government securities or other assets. Other stablecoins use cryptocurrency collateral, derivatives or different mechanisms.

Stablecoins use different methods to maintain their value, depending on how they’re designed.

  • Peg. The asset the stablecoin is designed to track, such as the US dollar or gold.
  • Backing. The reserves or collateral intended to support the stablecoin’s value.
  • Minting. The process of creating new stablecoins and adding them to circulation.
  • Burning. The process of removing stablecoins from circulation, typically when they’re redeemed.
  • Redemption and arbitrage. Buying or redeeming stablecoins when their market price differs from their target value can help bring the price back toward its peg.

The way a stablecoin is designed affects how its value is maintained and what risks it carries.

What are the different types of stablecoins?

Stablecoins can be grouped by how they maintain their value. The main types include:

TypeHow it worksExamples
Fiat-backedBacked primarily by fiat currency, cash equivalents and other reserve assets.USDT, USDC
Crypto-backedUses cryptocurrency as collateral, often with more collateral held than the value of the stablecoins issued.DAI
Commodity-backedTracks the value of a commodity such as gold.PAXG
Synthetic or algorithmicUses mechanisms such as collateral, trading strategies or derivatives rather than straightforward fiat reserves.USDe

These categories aren’t always completely distinct. Some newer stablecoins use a combination of collateral, derivatives and other mechanisms to maintain their target value, so their classification can depend on how they are structured.

The type of stablecoin matters because its backing and design can affect how it maintains its value and the risks users face.

Compare stablecoins side-by-side

StablecoinSymbolPegType
TetherUSDTUSDFiat-backed
USDCUSDCUSDFiat-backed
Sky DollarUSDSUSDCrypto-backed/hybrid
DaiDAIUSDCrypto-backed
Ethena USDeUSDeUSDSynthetic
World Liberty Financial USDUSD1USDFiat-backed
Global DollarUSDGUSDFiat-backed
PayPal USDPYUSDUSDFiat-backed
Ripple USDRLUSDUSDFiat-backed
USDDUSDDUSDCrypto-backed
United StablesUUSDHybrid
Falcon USDUSDfUSDCrypto-backed
GHOGHOUSDCrypto-backed
Usual USDUSD0USDRWA-backed
Solstice USXUSXUSDCrypto-backed
TrueUSDTUSDUSDFiat-backed
Euro CoinEURCEURFiat-backed
Ethena USDtbUSDTBUSDTreasury-backed
First Digital USDFDUSDUSDFiat-backed
Gemini DollarGUSDUSDFiat-backed
Agora DollarAUSDUSDFiat-backed
crvUSDcrvUSDUSDCrypto-backed
Anchorage Digital USDUSATUSDFiat-backed
USD.AIUSDaiUSDCrypto-backed
Re Protocol reUSDreUSDUSDCrypto-backed
FraxFRAXUSDHybrid
Frax USDFRXUSDUSDFiat/RWA-backed
DolaDOLAUSDCrypto-backed
sUSDSUSDUSDCrypto-backed
fxUSDFXUSDUSDCrypto-backed
Pax DollarUSDPUSDFiat-backed
Pax GoldPAXGGoldCommodity-backed
Tether GoldXAUTGoldCommodity-backed
EUR CoinVertibleEURCVEURFiat-backed
EuriteEURIEURFiat-backed

What are stablecoins used for?

Stablecoins have uses beyond trading and investing. Their relatively stable value makes them useful for moving money and interacting with blockchain-based financial services.

  • Crypto trading. Move between volatile cryptocurrencies without converting back to fiat currency.
  • Payments. Send and receive digital dollars or other assets designed to maintain a stable value.
  • Cross-border transfers. Send money internationally, potentially faster and at a lower cost than some traditional payment methods.
  • DeFi. Lend, borrow, provide liquidity and access other decentralized financial services.
  • Storing value. Hold a relatively stable-denominated asset on a blockchain without relying on a traditional bank account.
  • Business settlement. Transfer and settle funds between businesses or financial institutions.

What happens if a stablecoin loses its peg?

A depeg occurs when a stablecoin’s market price moves significantly away from the value it is designed to track. For example, a US dollar-pegged stablecoin may fall below $1.

  • Why it can happen: Reserve concerns, liquidity problems, falling collateral values, market panic or problems with the issuer can cause a stablecoin to lose its peg.
  • What it means: Holders may be unable to sell or redeem the stablecoin at its intended value, potentially resulting in losses.
  • Small vs. major depeg: Some price deviations are temporary and relatively small, while severe or prolonged depegs can result in substantial losses.

Are stablecoins safe?

Stablecoins are designed to be less volatile than many other cryptocurrencies, but they aren’t risk-free. The risks vary depending on the stablecoin, its issuer, how it is backed and the blockchain it uses.

RiskWhat it means
DepeggingThe stablecoin falls below or rises above its target value.
Issuer riskThe issuer experiences financial or operational problems.
Reserve riskThe assets backing the stablecoin don’t adequately support its supply.
Smart-contract riskA vulnerability in the underlying code could cause losses.
Regulatory riskChanges in regulations may restrict how or where a stablecoin can be issued or used.
Blockchain riskNetwork congestion, outages or other problems can disrupt transactions.

A stablecoin’s relative price stability doesn’t mean it is as safe as cash or a bank deposit. It’s important to consider how a specific stablecoin maintains its value and the risks associated with its design.

How are stablecoins regulated in the US?

The GENIUS Act, signed into law in July 2025, established the first federal regulatory framework specifically for payment stablecoins in the US. It sets requirements for who can issue payment stablecoins, how they must be backed and how issuers are supervised.(1)

Under the law, permitted issuers must generally:

  • Maintain reserves: Hold qualifying reserve assets to back their payment stablecoins.
  • Allow redemption: Maintain processes for holders to redeem stablecoins.
  • Meet disclosure and reporting requirements: Provide information about reserves and other aspects of their operations.
  • Follow risk-management requirements: Meet standards covering areas such as custody, audits and operational risk.
  • Follow anti-money laundering and sanctions rules: Treasury proposed rules in April 2026 requiring permitted issuers to maintain AML and sanctions compliance programs.(2)

The framework is still being implemented. In February 2026, the Office of the Comptroller of the Currency (OCC) proposed rules covering reserve assets, redemption, risk management, audits, reporting, custody and supervision.(1)

In August 2026, the Treasury Department proposed additional rules defining when an issuer is considered to be issuing a payment stablecoin in the US.(3)

The GENIUS Act is scheduled to take effect on January 18, 2027, or earlier if final implementing regulations are issued sooner.(3)

Note: The GENIUS Act primarily regulates payment stablecoins. Not every cryptocurrency marketed as a stablecoin necessarily falls under the same regulatory framework, so the rules that apply can depend on the asset and its issuer.

Compare crypto exchanges to buy stablecoins

Explore crypto exchanges by Finder Score, fiat currencies or more. Select the Go to Site button for more information about a particular exchange.

5 of 17 results
Finder Score Fiat currencies Cryptocurrencies Deposit methods Disclaimer
8.6Great
50
1086
Cryptocurrency, PayPal, P2P
Not available for US citizens
Go to site

Capital at risk

More info
Compare product selection
8Great
73
281
Bank transfer, Credit card, Cryptocurrency, Debit card, P2P
Disclaimer: Highly volatile investment product. Your capital is at risk. Not available for US citizens
Go to site

Capital at risk

More info
Compare product selection
8.2Great
26
105
Bank transfer, Debit card, PayPal, Wire transfer
Crypto Trading is offered via eToro USA LLC (NMLS ID: 1769299). This entity is not a registered broker-dealer or FINRA member and your cryptocurrency holdings are not FDIC or SIPC insured. Investments are subject to market risk, including the possible loss of principal.
Important information
Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. [website domain name] is not an affiliate and may be compensated if you access certain products or services offered by the MSB.
Go to site

Capital at risk

More info
Compare product selection
OKX logo
9.4Excellent
OKX Cryptocurrency Exchange
9.4Excellent
1
181
Bank transfer (ACH), Debit card, Wire transfer, Apple Pay, Google Pay, Plaid
Go to site

Capital at risk

More info
Compare product selection
SoFi logo
7.8Great
SoFi Crypto
7.8Great
1
29
External bank transfer (ACH), Inbound wire transfer, ATM deposit
DIGITAL ASSETS EXCEPT SOFI EARN (SOFIE) ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE SoFi Crypto is offered by SoFi Bank, N.A. Cryptocurrency and digital assets are not deposits, involve risk and are not insured by FDIC. Please refer to the SoFi Crypto Account Agreement and SoFi Crypto Risk Disclosure for additional terms and conditions.
Important information
DIGITAL ASSETS EXCEPT SOFI EARN (SOFIE) ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Digital assets offered through SoFi Crypto are highly speculative, involve significant risk, and may result in the complete loss of value. These assets are not deposits, are not insured by the FDIC or SIPC, are not bank guaranteed, and may lose value. SoFi Crypto is offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency. SoFi Bank does not provide investment, tax, or legal advice. Please refer to the SoFi Crypto Account Agreement and SoFi Crypto Risk Disclosure for additional terms and conditions. SoFi Earn (SOFIE) is a separate product from SoFi Crypto. SOFIE is a tokenized deposit representing a deposit liability of SoFi Bank, N.A., Member FDIC. Funds represented by SOFIE are eligible for FDIC insurance up to applicable FDIC rules and limits. SOFIE is not a payment stablecoin. Please refer to the SoFi Bank Tokenized Deposit Account Agreement for additional terms and conditions. Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 10/20/26. There is no minimum balance requirement. Fees may reduce earnings. Additional information can be found at https://www.sofi.com/crypto/legal/tokenized-deposit-rate-sheet. Funds represented by SOFIE are insured up to $250,000 per depositor, per insured bank, for each account ownership category pursuant to the FDIC's general deposit insurance rules. For more information visit FDIC.gov.
Go to site

Capital at risk

More info
Compare product selection
loading
Showing 5 of 17 results
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Bottom line

Stablecoins offer a way to hold and transfer digital assets designed to maintain a relatively stable value. While they’re widely used for crypto trading, they’re also increasingly used for payments, transfers and DeFi. However, stability depends on how each stablecoin is backed and designed, and all stablecoins carry some level of risk.

Consider consulting a financial advisor for personalized advice based on your portfolio, and choose a crypto exchange that offers stablecoins to begin investing.

Frequently asked questions

Matt Miczulski's headshot
To make sure you get accurate and helpful information, this guide has been edited by Matt Miczulski as part of our fact-checking process.
Holly Jennings's headshot
Written by

Deputy Crypto Editor
Add to Preferred Sources

Holly Jennings is the deputy crypto editor and updates writer at Finder, working with writers across all niches to deliver quality content to readers. She’s edited hundreds of financial articles ranging from credit cards to investments. With empathy at heart, she especially enjoys content that breaks down complex financial situations into easy-to-understand information. Prior to her role at Finder, she collaborated with dozens of small businesses to maximize the reach and impact of their blog posts, website copy and other content. In her spare time, she is an award-winning author for Penguin Random House, writing about virtual reality worlds, magical girls and lasers that go pew-pew. See full bio

Holly's expertise
Holly has written 74 Finder guides across topics including:
  • Cryptocurrency
  • Digital assets
  • Investments
  • Personal Banking
Lena Borrelli's headshot
Co-written by

Contributor

Lena Borrelli is an experienced finance writer with a deep understanding of personal finance, investing and consumer banking. Her work has been featured in top-tier publications such as Forbes, TIME, Bankrate, Moneywise and Annuity.org, where she provides expert insights on financial trends, smart money management and emerging fintech solutions. With a background in personal finance and content strategy, Lena specializes in breaking down complex financial topics into clear, actionable advice for readers. When she is not writing or scanning the news for the latest headlines, she is happiest spending time in the Florida sunshine with her husband and two pups. See full bio

More resources on Finder

Ask a question

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and finder.com Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

More guides on Finder

Go to site