Stablecoins, explained

The biggest stablecoin failures, and what they taught the market

Three stablecoin designs have failed publicly and at scale: algorithmic coins with no reserve (TerraUSD, ~$40B lost), partially-collateralised hybrids (Iron Finance, ~$2B), and fiat-backed coins whose reserves were temporarily inaccessible (USDC/SVB, recovered). The lessons shaped both regulation and the architecture of the coins that followed.

A brief history of stablecoins: from Tether (2014) to the GENIUS Act

Stablecoins began as a trader's tool to park value on exchanges without leaving crypto. Over twelve years they evolved into payment infrastructure moving tens of trillions of dollars annually, acquired regulatory frameworks in the US and EU, and attracted institutional issuers from PayPal to Ripple. The arc runs from Tether's 2014 launch through the TerraUSD collapse to the GENIUS Act of 2025.

How do stablecoins keep their peg?

Stablecoins hold their $1 value through a combination of liquid reserve backing, continuous arbitrage, and — for crypto-collateralised designs — on-chain liquidation engines. Each mechanism has a failure mode; the TerraUSD collapse of 2022 is the definitive case study in what happens when the mechanism is circular rather than anchored.

How to read a stablecoin reserve report

A stablecoin reserve report — properly called an attestation — is a point-in-time snapshot by an independent accounting firm confirming that the issuer held enough assets to cover every token in circulation on one specific date. Reading one correctly means understanding what it proves, what it does not prove, and what the reserve composition reveals about stability under stress.

S&P stablecoin stability ratings, explained

S&P Global Ratings publishes Stablecoin Stability Assessments (SSAs) that score coins on a 1–5 scale based on reserve quality, governance, regulatory compliance, liquidity, and track record. No stablecoin has received a '1 (very strong).' USDC scored '2 (strong)'; USDT scored '4 (constrained).' The scores are not credit ratings and do not predict insolvency — they assess peg stability risk specifically.

Stablecoin counterparty risk: how to evaluate your exposure

Holding a stablecoin means trusting multiple parties simultaneously: the issuer, the reserve custodians, the chain's validators, and — if you use a centralised exchange — the exchange itself. Each layer adds counterparty exposure. Mapping and sizing those exposures is the core of stablecoin risk management for businesses and serious holders.

What are stablecoin reserves, and how do you check them?

Stablecoin reserves are the assets an issuer holds to back each token at $1. Understanding what is in those reserves, how attestations differ from full audits, and where to find the primary sources lets you evaluate any stablecoin on its own evidence rather than its marketing.

Stablecoin risks: what every user and business should know

Stablecoins carry real risk despite the word 'stable.' The risks vary by design — reserve quality and issuer solvency for fiat-backed coins, collateral crashes for crypto-backed, and reflexive collapse for algorithmic. Understanding the risk class behind a specific coin is the starting point for any serious exposure decision.

Stablecoin trends to watch heading into 2027

The stablecoin market enters 2027 with $320B+ in supply, two major regulatory frameworks in force, and B2B payment volume up 733% year-on-year. The next phase is defined by five trends: GENIUS Act implementation reaching its first anniversary, bank-issued tokens moving from institutional-only to consumer rails, machine-to-machine payments maturing, the euro stablecoin gap narrowing, and supply forecasts pointing toward a potential $1 trillion market.

Stablecoin vs cryptocurrency: what's the difference?

Cryptocurrencies like Bitcoin and Ether are designed to be scarce and freely traded, so their prices move. Stablecoins are designed to stay at a fixed price — almost always one US dollar — by holding reserves or using on-chain mechanisms. That single difference determines which is useful as money and which is useful as an investment.

The state of stablecoins in 2026

The stablecoin market crossed $320 billion in circulating supply by mid-2026, with B2B payment volume up 733% year-on-year. USDT and USDC account for more than 80% of supply. The GENIUS Act set a US licensing framework; MiCA is fully in force in Europe. Adoption is institutional and accelerating.

Types of stablecoins: fiat-backed, crypto-backed & algorithmic

Stablecoins come in three designs — fiat-backed, crypto-backed (over-collateralised), and algorithmic — each with a different peg mechanism, capital model, and failure mode. Fiat-backed coins dominate supply and payments; the algorithmic design has a record of catastrophic failure.

USDC vs USDT vs PYUSD vs RLUSD: a 2026 comparison

The four largest regulated dollar stablecoins — USDC, USDT, PYUSD, and RLUSD — differ on market cap, issuer structure, reserve composition, regulatory licensing, and EU availability. All four can move on Tempo.

USDC vs USDT: which stablecoin should you use?

USDC and USDT are both fiat-backed dollar stablecoins, but they differ on issuer, reserve transparency, regulatory posture, and geographic availability. USDT leads on liquidity and emerging-market reach; USDC leads on compliance, transparency, and EU access. The right choice depends on where and how you move money.